8 ms·

I 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, a

I 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 ago
I 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 ago
  I 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 ago
  If 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)
  - tlbsofware 6y ago
    They have with their lvl 2 market data, but that’s hidden behind a paywall
wjnc 6y ago
I don't hate it. The Hertz proposition is quirky and strange, but it's fully out there as well. These risk paragraphs are fun to read because they're ment to be a clear warning of what could go wrong. Not too much CEO-speak allowed, because if you cover up and mess up, you'll get sued. This filing, or say the WeWork IPO are in my book good examples of a part of financial regulation just working.
- JackFr 6y ago
  IANAL, but when you sue the bankrupt company for going bankrupt, the same judge that allowed the IPO will be the one to look at your lawsuit accusing fraud. Seems to me like he’d toss the claim and it would be discharged through bankruptcy.
specialp 6y ago
There's no hate on the offering itself. Hertz would be negligent if they didn't tap a source of interest free funding at the lowest position in the bankruptcy repayment. They saw the demand for their stock and took advantage. The hate is on the "investors" yes but I don't hate them. It is just that if they really thought auto rentals were going to rebound there are plenty of other opportunities out there that are currently not bankrupt. But hey, they aren't "99% off" like Hertz is.
tuna-piano 6y ago
However, as long as someone isn’t betting their life savings on this I don’t see or take any issue with it. ... Thai Gaon, a 23-year-old salesman in San Francisco, bought 35,000 Hertz shares on June 4 at $1.43, spending a little over $50,000, according to documents viewed by The Wall Street Journal. “It was my entire life savings,” he said. “I decided, you know, if I’m gonna do it, I should do it big, and I’ll make a play and see what comes out of it.” 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...
- alexandercrohde 6y ago
  shrug And people jump off bridges. Doesn't mean we stop building bridges. The market is rough, them's the rules, sorry not sorry.
  - toomuchtodo 6y ago
    I mean, we make the rules with government. We can change the rules whenever we want. Maybe a rule should exist for such edge cases to protect unsophisticated investors in a country not known for financial literacy?
    - SpicyLemonZest 6y ago
      Yeah, I tend to agree. This kind of deal with extreme and ridiculous risk is exactly what accredited investor rules are supposed to mitigate - but because Hertz is a public company they don't apply.
      - toomuchtodo 6y ago
        I’d agree accredited investor rules should apply for any public company fundraising while in bankruptcy.
    - gruez 6y ago
      You mean something like "accredited investor"?
elliekelly 6y ago
The hate is that it’s a hugely risky investment that Hertz is knowingly marketing to unsophisticated investors who don’t understand the offering enough to fully appreciate the risk and who aren’t in a financial position to absorb this kind of risk even if they do appreciate it. It’s a money grab. The second the stock is issued it’s basically worthless and Hertz knows it. But when these investors are inevitably screwed over they’ll basically have no recourse against Hertz so why not?
thaumasiotes 6y ago
> I 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. Disclaimer: I'm basing this comment on rough memories of undetailed news coverage. That said, the impression I got was that Hertz asked the bankruptcy court for permission to issue $1 billion of stock while needing ~$3 billion to pay off its creditors. This makes no sense to me. The right thing to do would be to try to sell $3 billion of stock. In that case, the path to non-failure is obvious. Here, failure isn't just the most likely option; it's also the plan. (Would issuing so much new stock wipe out pre-bankruptcy stockholders? It might, but so does the bankruptcy.)
Spooky23 6y ago
> I don’t get the hate on this offering. It's pretty obvious -- it's bullshit. The only reason it's happening is that the regulators have been gelded and there is no reason not to. Adam Smith's invisible hand has been replaced by a dirty glove giving the public the finger.
itsoktocry 6y ago
>but the upside is there if they pull it off. Pull what off? The company is bankrupt, the equity will be wiped out, they literally say that in the filing: "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" No one is "putting their nose to the grindstone" to save the company. The money is going to the creditors.
- pbreit 6y ago
  Equity going to 0 is not a foregone conclusion in bankruptcies and there will be plenty of room for lawsuits if equity holders are wiped out.
  - anthony_r 6y ago
    Equity "going to 0" is a consequence of a court proceeding called "bankruptcy". It is the courts of law that approve the deletion of equity. So not sure whom are you going to sue. It will not go to $0. It will simply stop existing. You are free to trade it until then.
    - harryh 6y ago
      Lots of companies enter bankruptcy, are restructured, and emerge from the process without equity being destroyed. There is certainly some chance that happens here.
      - anthony_r 6y ago
        Oh really, I thought it's super rare (like this filling strongly suggests). What are some examples?
    - pbreit 6y ago
      It's common for equity to maintain some value coming out of bankruptcy.
brogrammernot 6y ago
Well this blew up, and the deal got pulled anyways.

mox1 6y ago

I 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 ago
I 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 ago
If 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)
- tlbsofware 6y ago
  They have with their lvl 2 market data, but that’s hidden behind a paywall

wjnc 6y ago

I don't hate it. The Hertz proposition is quirky and strange, but it's fully out there as well. These risk paragraphs are fun to read because they're ment to be a clear warning of what could go wrong. Not too much CEO-speak allowed, because if you cover up and mess up, you'll get sued. This filing, or say the WeWork IPO are in my book good examples of a part of financial regulation just working.

JackFr 6y ago
IANAL, but when you sue the bankrupt company for going bankrupt, the same judge that allowed the IPO will be the one to look at your lawsuit accusing fraud. Seems to me like he’d toss the claim and it would be discharged through bankruptcy.

specialp 6y ago

There's no hate on the offering itself. Hertz would be negligent if they didn't tap a source of interest free funding at the lowest position in the bankruptcy repayment. They saw the demand for their stock and took advantage. The hate is on the "investors" yes but I don't hate them. It is just that if they really thought auto rentals were going to rebound there are plenty of other opportunities out there that are currently not bankrupt. But hey, they aren't "99% off" like Hertz is.

tuna-piano 6y ago

However, as long as someone isn’t betting their life savings on this I don’t see or take any issue with it. ... Thai Gaon, a 23-year-old salesman in San Francisco, bought 35,000 Hertz shares on June 4 at $1.43, spending a little over $50,000, according to documents viewed by The Wall Street Journal. “It was my entire life savings,” he said. “I decided, you know, if I’m gonna do it, I should do it big, and I’ll make a play and see what comes out of it.” 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...

alexandercrohde 6y ago
shrug And people jump off bridges. Doesn't mean we stop building bridges. The market is rough, them's the rules, sorry not sorry.
- toomuchtodo 6y ago
  I mean, we make the rules with government. We can change the rules whenever we want. Maybe a rule should exist for such edge cases to protect unsophisticated investors in a country not known for financial literacy?
  - SpicyLemonZest 6y ago
    Yeah, I tend to agree. This kind of deal with extreme and ridiculous risk is exactly what accredited investor rules are supposed to mitigate - but because Hertz is a public company they don't apply.
    - toomuchtodo 6y ago
      I’d agree accredited investor rules should apply for any public company fundraising while in bankruptcy.
  - gruez 6y ago
    You mean something like "accredited investor"?

elliekelly 6y ago

The hate is that it’s a hugely risky investment that Hertz is knowingly marketing to unsophisticated investors who don’t understand the offering enough to fully appreciate the risk and who aren’t in a financial position to absorb this kind of risk even if they do appreciate it. It’s a money grab. The second the stock is issued it’s basically worthless and Hertz knows it. But when these investors are inevitably screwed over they’ll basically have no recourse against Hertz so why not?

thaumasiotes 6y ago

> I 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. Disclaimer: I'm basing this comment on rough memories of undetailed news coverage. That said, the impression I got was that Hertz asked the bankruptcy court for permission to issue $1 billion of stock while needing ~$3 billion to pay off its creditors. This makes no sense to me. The right thing to do would be to try to sell $3 billion of stock. In that case, the path to non-failure is obvious. Here, failure isn't just the most likely option; it's also the plan. (Would issuing so much new stock wipe out pre-bankruptcy stockholders? It might, but so does the bankruptcy.)

Spooky23 6y ago

> I don’t get the hate on this offering. It's pretty obvious -- it's bullshit. The only reason it's happening is that the regulators have been gelded and there is no reason not to. Adam Smith's invisible hand has been replaced by a dirty glove giving the public the finger.

itsoktocry 6y ago

>but the upside is there if they pull it off. Pull what off? The company is bankrupt, the equity will be wiped out, they literally say that in the filing: "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" No one is "putting their nose to the grindstone" to save the company. The money is going to the creditors.

pbreit 6y ago
Equity going to 0 is not a foregone conclusion in bankruptcies and there will be plenty of room for lawsuits if equity holders are wiped out.
- anthony_r 6y ago
  Equity "going to 0" is a consequence of a court proceeding called "bankruptcy". It is the courts of law that approve the deletion of equity. So not sure whom are you going to sue. It will not go to $0. It will simply stop existing. You are free to trade it until then.
  - harryh 6y ago
    Lots of companies enter bankruptcy, are restructured, and emerge from the process without equity being destroyed. There is certainly some chance that happens here.
    - anthony_r 6y ago
      Oh really, I thought it's super rare (like this filling strongly suggests). What are some examples?
  - pbreit 6y ago
    It's common for equity to maintain some value coming out of bankruptcy.

brogrammernot 6y ago

Well this blew up, and the deal got pulled anyways.