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Hertz SEC Filing: Up to $500M Common Stock
- mot0rola 6y agoIf anyone is looking for a used car, they have a lot of their fleet up for sale here: https://www.hertzcarsales.com/ https://www.hertzcarsales.com/
- eatbitseveryday 6y agoOP perhaps saw this comment? https://news.ycombinator.com/item?id=23517270 https://news.ycombinator.com/item?id=23517270
- wjnc 6y ago"Although we cannot predict how our common stock will be treated under a plan, we expect that common stock holders would not receive a recovery through any plan unless the holders of more senior claims and interests, such as secured and unsecured indebtedness (which is currently trading at a significant discount), are paid in full, which would require a significant and rapid and currently unanticipated improvement in business conditions to pre-COVID-19 or close to pre-COVID-19 levels." You will lose all your money unless there is an unanticipated improvement in business condition! I love how you just can't bullshit in your SEC-filings.
- deleted 6y ago[deleted]
- varjag 6y agoNot that far from Uber IPO filing tbh.
- collyw 6y agoI would be happy for Airbnb And Uber both to go.
- arbuge 6y agoThey know very well that the kind of people who read these filings are not the same kind of people eagerly buying their stock at this point.
- SilasX 6y agoYeah, they’re nothing like the sophisticated, mature investors that are buying 30-year government bonds that probably won’t even keep up with inflation. To phrase less trollishly: there aren’t a lot of good investments now, and even government bonds seem overvalued.
- H8crilA 6y agoThat's called "financial repression". Sorry that it causes you to take excessive risks, there are many like you. Walter Bagehot, the de facto founder of The Economist, was of the opinion that people will never stand 2% rates (and he meant plus :) ). They would rather fund anything, any project, the weirdest thing that offers any hope of yield; no matter how stupid. And here we are, 143 years after Bagehot passed away. Sir, you are still absolutely correct!
- toomuchtodo 6y agoWouldn’t it be more accurate to call it “financial entitlement”, to believe that your capital would always have positive value? While we’ll likely never run out of need for human labor, it’s very possible we’re running out of capital investment opportunities that realize a risk adjusted return above 0. “Too much money chasing too few deals” and all that jazz.
- H8crilA 6y agoI totally agree that growth and gains on capital are not a given, but: 1) The world's real GDP is still going up. Or at least has been till 2019. 2) Even if it was to slow down and remove prospects of gains on capital - it still doesn't mean that people will adjust quickly; you'd have to rewrite the entire concept of pensions for starters. 3) It seems to me that core rates are seriously manipulated down (interest rates, default spreads, equity discount rates); just look at ballooning of the balance sheets of pretty much everything, or look at the share of "zombie" companies, that is companies that cannot even service their interest payments. 3 is of course just an opinion, but if true will result in serious clogging of the machine with useless actors. 3 is where, I believe, things like "bullshit jobs" / "the office" come from, for example.
- deleted 6y ago[deleted]
- CalChris 6y agoDebt is senior to equity.
- beervirus 6y agoRobinhood traders buying anyway, what can you do.
- koolba 6y agoThe intersection of buying their stock this past week and people who read SEC filings rounds down to zero.
- deleted 6y ago[deleted]
- nogabebop23 6y agoSweet potato pie! Read the entire "Risks" section it goes something like this: Smithers: What would each of you say is your worst quality? Man 1: Well, I a workaholic. Man 2: I push myself too hard. Hertz: Well, it takes me a long time to learn anything, I'm kind of a goof-off... Smithers: Okay, that'll do. Hertz: ... a little stuff starts disappearing from the workplace... Smithers: That's enough!
- 3327 6y agoYou cannot make tendies day if you read the fillings.
- perl4ever 6y agoI find this disturbing, a corruption of the system, despite the disclosure, and despite that I personally like to read SEC filings. Just telling people something is a scam is not enough, when the action of allowing it to go on implies that it must not be. It's like, suppose you go to the hardware store and you buy a rake. And on it there is a label with the standard warning "this contains substances known to the state of California to cause cancer, etc.". So you buy it, take it home, and a month later you die horribly because it was radioactive or something. You can argue about the percentage of guilt that accrues to the manufacturer, the store, the California lawmakers, etc. But it's not right to blame the victim, because when people get conflicting information, they have to disregard some of it, and you can't consistently go against the herd in such situations. It's necessary to have a level of trust that underpins the explicit language and gaming of rules that people engage in. I know not to buy stock in bankrupt companies, but I don't think I'd be as dumb as the stereotype of Robinhood investors if I was naive enough to think, "well, they say it's worthless, but if the SEC allows it, it must not be a complete scam" and bought it anyway.
- pmiller2 6y agoYour rake analogy is a little flawed, just because those "known to the state of California...." warning signs are practically everywhere. If they were actually rare, and this rake was the only thing in the store that had the sign, and the store was requiring a liability waiver to buy one, then you'd have a much closer analogy. In that scenario, given the multiple warning signs (including an actual, literal warning sign), I do think it's fair to say the purchaser holds some blame for being a dumbass. The legal system might say otherwise, but, if you do something that you've been warned multiple times is really, really dumb, by who should know you're about to do a dumb thing, then personal responsibility needs to accrue somewhere.
- perl4ever 6y agoIt's a matter of opinion on how much this warning stands out. I don't think there is going to be a special waiver to buy Hertz stock; the whole point is to be able to go directly to the public in an unrestricted manner. But let's stipulate that in some sense the warning is rare and extreme, that doesn't affect my opinion. If a new Apple laptop came with a warning that violation of a license would result in earth falling into the sun, the severity and rarity wouldn't make you say "gee it really might happen". You might look into whether it was really from Apple, if it was a joke, what other people thought. If millions of other people were buying them, you would assume that it can't happen, because the validation of things people do overrides the warning regardless of severity. Deceiving someone by telling them the truth in a situation where they are conditioned not to believe it is not a trick that somehow transfers responsibility. It's not better than directly telling a lie. It's worse, because it sets people up to believe the next lie after you've proven they were wrong to ignore the truth. It's like, I don't know, cargo cult morality. I wouldn't believe for a minute this is ok to buy because I'm untrusting. But if I trusted the SEC or the laws and concluded this can't be a scam, because it would be illegal otherwise, then it's a mark of corruption and rot in society to punish trust in the system as stupidity or lack of responsibility. The very fact that it is being allowed creates genuine doubt in my mind about who to believe and what's going on, even though I would not make the decision to buy.
- deleted 6y ago[deleted]
- AndrewBissell 6y agoGood to know we can count on the SEC to bust small-time dentists who make $70K on options trades off insider info, and also rubber stamp financial maneuvers which are guaranteed to harm numerous retail investors like this. If the ruling principle of our financial markets is going to be "caveat emptor" why don't we just disband those portions of the SEC which are supposed to vet securities offerings?
- mediaman 6y agoThe filing clearly states investors will lose their money. If you're intent on losing money, there are many worse ways to do it, and nobody can claim this registration is deceitful.
- AndrewBissell 6y ago> The filing clearly states investors will lose their money. So if I want to sell stock with a registration statement which says, "this is a Ponzi scheme and investors who buy in too late will lose all their money," that should be permissible?
- WJW 6y agoPonzi schemes are forbidden by law, so no that would not be permissible. It's completely legal to file for an IPO for a company when you have no business plan yet though. As long as you are open about what you intend to do and it's not illegal then the SEC won't stand in your way. See https://www.investor.gov/introduction-investing/investing-basics/glossary/blank-check-company https://www.investor.gov/introduction-investing/investing-ba... for example.
- occamrazor 6y agoI am a bit conflicted, but overall, if the description is fair and the disclaimer is clear, I would allow it. Lotteries ang gambling are legal after all.
- nokcha 6y ago>So if I want to sell stock with a registration statement which says, "this is a Ponzi scheme and investors who buy in too late will lose all their money," that should be permissible? If you make sure that investors are actually aware (e.g., you don't try to bury it in fine print), then I don't see why not, as long it complies with the gambling laws of the relevant jurisdiction.
- pascalxus 6y agoI for one, will not miss hertz. They charged me 100$ for a baby seat, without even listing the price. Then, when I confronted them about it, they tried to deny responsibility by saying it was the billing vendor's fault even though they're the ones who received the money.
- aorth 6y agoCame to say this. In 2019 I opted for Hertz instead of a cheaper local company because I wanted to be sure to get a proper infant car seat. They charged me something similar and when I went to pick up the car they had a toddler seat. I said that my baby is only six months old hello... the Hertz rep asked her friend from another company next door, who gave us an infant seat, albeit one that was like a weird reclined plastic shell (with the price tag still on it, worth $50!). I was super bitter at Hertz after that. We ended up going and buying a proper car seat for about $150 for our ten-day trip.
- DangerousPie 6y agoWhat a crazy story. Matt Levine's post about this is great as usual: https://www.bloomberg.com/opinion/articles/2020-06-12/if-you-want-hertz-have-some-hertz%0A https://www.bloomberg.com/opinion/articles/2020-06-12/if-you...
- hn_throwaway_99 6y agoAgreed, I think this is the craziest investing story in my lifetime. Trying to find the HN link from last week about an article that said this was the 3rd type of bubble: type 1 is you expect the future to continue on with more of the present indefinitely, type 2 is you expect the future to be substantially different from the present, and this type 3 is the future just doesn't matter. While the world is in a betting mood, I'm just going to bet my 2 cents on "I don't think this will end well."
- DangerousPie 6y agoThis one? https://alexdanco.com/2020/06/14/never-hertz-to-ask/ https://alexdanco.com/2020/06/14/never-hertz-to-ask/
- staplers 6y agoAgreed, I think this is the craziest investing story in my lifetime. I remember people buying off-the-market IOUs for bitcoins from people who had accounts on Mt. Gox at a significant discount after they had announced they were illiquid and couldn't find them lol. Link to the company: https://bitcoinbuilder.com/ https://bitcoinbuilder.com/ Looks like they're still in pending status! Wow
- MrRadar 6y agoThe crazy thing is that people are still doing that with Tethers (USDT). They've admitted in legal filings that they only have 74% backing for them[1] and yet they continue to trade within 1 cent of par with the US dollar. Sometimes they even trade above par! It's madness. [1] https://www.bloomberg.com/news/articles/2019-04-30/tether-says-stablecoin-is-only-backed-74-by-cash-securities https://www.bloomberg.com/news/articles/2019-04-30/tether-sa...
- jonplackett 6y agoAm I the only person who actually liked Hertz? Never had a bad experience with them. Tried a cheaper car rental place ONE time, and the brakes failed on the car...
- thoraway1010 6y agoI filled up with gas literally at the closest station (.1 mile away? You could see the lot from station). BOOM, charged for an empty tank. No worries, I'd actually kept my receipt from the gas station showing exactly when I'd refilled (2 minutes before dropping car). It was an endless headache and run around to try to get them to cancel out the charge. That kind of run around should be illegal. I normally used National (because you can pick any car on their 'aisle') and never had that issue with them.
- giarc 6y agoI think the problem is the franchisees that operate the locations. There are a million stories out there of scamming people. Especially at airport locations where they know the person returning the vehicle is likely to be in a rush and not live in that location. It's more of a hassle for you to return and fight for something. I had a rental company claim I "totalled the right front side of the vehicle" and had $3000+ in damages. I asked for dated photos of the damage and all of a sudden the claim of damage went away. I always take a dozen or so photos of the car before and after I drop it off. Takes 2 minutes but can save a ton of time and money down the road.
- neltnerb 6y agoSame for apartments if you want any hope of fighting bogus claims on security deposits. For some reason all the contracts I've seen want a written description of damage. That just isn't enough. Take photos of everything you find before you move in and include them in the statement of the state of the house.
- deleted 6y ago[deleted]
- m3kw9 6y agoA new financial instrument, how familiar!
- WJW 6y agoIt is actually just more of the stock that's already out there though. People want to buy it, Hertz wants to sell it to them.
- cs702 6y ago"Inconceivable!" Few things could symbolize "the YOLO Stock Market" better than the successful issuance of worthless stock by a company that is already in bankruptcy after it has explicitly warned in the prospectus that its stock is worthless unless there is an "unanticipated improvement in business conditions." Boring details such as "how much is this worth?" or "does it have any value?" or "who gets what in this bankruptcy?" are evidently irrelevant to the buyers of the stock, who must be trying to "beat the gun," as J. M. Keynes described it nine decades ago[a] -- or maybe they just want to burn money with reckless courage and abandon as a novel form of conceptual performance art? [a] See also https://news.ycombinator.com/item?id=23517657 https://news.ycombinator.com/item?id=23517657 and https://news.ycombinator.com/item?id=23515797 https://news.ycombinator.com/item?id=23515797 .
- asdf21 6y agoJust wait until PCG exits bankruptcy this week! It'll probably get swarmed by investors trying to "buy the dip", even though the shares are very diluted now
- paulpauper 6y agoyeah but the successful insurance of new stock to cover debt means it may no longer be worthless
- swyx 6y agoReflexivity in motion! George Soros would be delighted.
- trophycase 6y agoI mean, any non-dividend paying stock is essentially worthless since it can only be redeemed in the case of a sale or liquidation
- camjohnson26 6y agoBy consolidating equity you can influence the direction of the company and push it to a liquidity event, that’s not worthless. It also has value as a bet on the future occurrence of a liquidity event.
- mediaman 6y agoHas it actually filled the offering? The title says it has, but the link is to the prospectus, which merely must be available before they begin at the market offerings. There is no indication I see that this title is correct and that Hertz has sold all $500 million of the ATM stock offering.
- floatingatoll 6y agoIt appears to be a typo for "files".
- icedchai 6y agoIs anyone buying puts?
- jaredtn 6y agoA $2 put for Jan 22 is currently trading with a 1.60-1.75 spread, meaning the break-even point is $0.25-0.40. Not much reward to have there. No shares available to short either.
- mhb 6y agoYes, but you would also sell the call for 0.80.
- jaredtn 6y agoGood point. Are you making that trade?
- mhb 6y agoNo. I've considered it but it would not make for a fun time if the crazies bid Hertz up significantly.
- jaredtn 6y agoThat's the thing - tough to know how long a bubble lasts for. And choosing a time horizon based on the court system is difficult because bankruptcy proceedings can drag on for a long long long time.
- wallawe 6y agoSelling call credit spreads has been wildly profitable for me, especially when the stock was around $5. If it runs back up again, I'll probably sell more. With this methodology you get the upside of likely decline in price without having to pay the massive premiums for puts.
- brogrammernot 6y agoI don’t get the hate on this offering. It’s a huge gamble for sure, but the upside is there if they pull it off. Do I think they will? No, I don’t. However, as long as someone isn’t betting their life savings on this I don’t see or take any issue with it.
- mox1 6y agoI suppose there is some theoretical upside to tiger attack insurance as well...doesn't mean my grandmother in Alaska should ever buy any.
- pmiller2 6y agoI get your point, but you chose a really bad example. A properly underwritten insurance policy never has any theoretical upside to anyone except the insurer. Premiums should also theoretically be close to proportional to the actual risk. Your grandma's premiums would be very low, but, unless a tiger escapes somewhere near her, she'd never be able to collect. And, any reasonable policy would have specific exclusions for willingly and knowingly going somewhere that tigers are native. :P
- ardy42 6y ago> I don’t get the hate on this offering. It's a nearly guaranteed loss, and and pretty much the only people who will invest in it are those that are too incompetent to realize that. It smells like a legal con to separate those people from their money.
- cj 6y agoIf you watch CNBC, the common theme is that "Robinhood traders" are buying/selling hertz (despite its near $0 actual worth) in a gamble for short term profits. Much like people buy/sell crypto with zero analysis of fundamentals. I don't think it's a bad decision for Hertz to offer up shares if it allows them to repay a greater percentage of their debt. I think the real problem is that there are a lot of people who are speculating (gambling) in stocks like Hertz. This has been the case since online brokers came in to existence, and has only been magnified by the recent trends toward $0 fee commission trades pushed by Robinhood and the like. If there is anything that I'd say needs to change, it would be apps like Robinhood should make detailed company information more easily accessible so people realize Hertz is going to $0 before gambling on a short term swing (which would mean making the UI/UX a bit more clunky + dense, so it probably won't happen)
- bananaquant 6y agoPSA: Hertz stock is already worthless. The only thing keeping it afloat are retail investors that keep piling in. They are pretty much guaranteed to lose money holding it.
- deleted 6y ago[deleted]
- gfodor 6y agoThis highlights something that I've always found confusing about the stock market. The traditional CAPM assumes stocks are priced based upon discounted future cash flows. But yet, we have many stocks which have an extremely high liklihood of never returning capital to investors: stocks which are likely to never buy back shares nor issue dividends. And yet, investors price them as if that capital will be returned to investors. There does seem to be something fairly unexplainable about stock valuation by the market. Perhaps this finally reveals something more to it.
- arawde 6y agoThat's because CAPM isn't the only way to price stocks. Some stocks can be priced like options, if they have contingent cashflows. Consider a biotech startup with a product coming to market. If they get FDA approval, that company is probably worth a lot! But if they don't, it might be worthless. Similar for an oil & gas company drilling for resources in a new area. You might like checking out Aswath Damadoran's videos on valuation https://www.youtube.com/watch?v=znmQ7oMiQrM#t=9m23s https://www.youtube.com/watch?v=znmQ7oMiQrM#t=9m23s.
- thoughtstheseus 6y agoIf you think this is crazy check out Bigfoot Project Investments.
- caseysoftware 6y agoI still think this is a smart move for Hertz. A loan comes with an interest rate and repayments. A new offering is just cash minus the fees. It's "free" in terms of future obligations. If this "IBO" gives Hertz the breathing room to restructure, clean up, and come out the other side, then well done. If not, no one will be surprised. It's a "no lose" scenario for them. As an investor, nope. If it drops down to penny stocks, I'll go "all in" with the $6 I can't transfer out of my Etrade account but not willing to consider anything real.
- apeescape 6y agoIs there a typo in the title? Right now it says "Intial Bankruptcy Offering", but should it say "Initial Bankruptcy Offering"?
- rkagerer 6y agoWas "fills" in the title supposed to read "files"?
- bob1029 6y agoI see a virtually 0% chance that Hertz emerges from this as the same legal entity as when they went in. That said, I have witnessed several corporate miracles within the last decade, and I am hesitant to dismiss these sorts of herculean efforts. Perhaps they are grasping at straws, but maybe someone knows something I don't. I usually default to the latter assumption when dealing with matters this complex. Keep in mind that when people are up against the ropes and running out of options, the amount of innovation that occurs can start to skyrocket. Nothing is out of bounds anymore. Everything becomes an option. As a result, I have bought an incredibly small # of shares in the extremely unlikely event that Hertz does emerge from this a viable company. If those shares evaporate into nothing tomorrow, I won't lose any sleep over it.
- KoftaBob 6y agoIn other words, this is the stock market equivalent of "hot potato". The retail investors buying on robinhood are doing so because they're betting they wont be the last one holding the chips.
- jonluca 6y ago@dang the title has a typo, I think it should be "Hertz files the ..."
- anthony_r 6y agoOP here, it is a typo. Too late to edit :(. Sorry!
- hogFeast 6y agoFed Chair: no risk of asset bubbles. ...that is nice.
- KKKKkkkk1 6y agoWeren't the airlines insolvent just a month or two ago, before they were bailed out? Can we confidently say that there is a 0% chance for a deus ex machina intervention that will bring the equity back into play? I'm not suggesting that buying into this offering is a good idea or that bailouts are a good idea. However, given recent experience, assigning a > 0 price to Hertz equity is not irrational.