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Jun 6, 2017

S3 Research: Hertz: Carl Icahn vs Short Sellers

Shares of Hertz Global Holdings (HTZ US), the car rental retailer, has had a very rough ride so far in 2017.
With the stock price down 55%, short sellers have enjoyed a mark-to-market paper profit of $201.5 million, yielding 82.3% net of financing fees on an average short position of $242.3 million this year. 

S3 Partners calculates as much as 27.7 million shares are currently sold short at the moment, which would put the number of shares on loan at a record high for the company.  With Carl Icahn disclosing a 35% long stake as of 3/31, over half of the freely floated shares (51.4%) are now in the hands of bearish speculators.  As witnessed with his public battle with Bill Ackman over Herbalife (HLF US), Mr. Icahn is certainly not afraid of building large stakes in a company he has conviction with the added bonus of a potential short squeeze.   

Taking a look at a 90-day snapshot of our award-winning Black App currently available on Bloomberg {APPS BLACK <GO>}, one can see a direct correlation between Hertz stock price (green trend line) and short interest (orange trend line). 

With at least another 15 million shares in lending programs currently trading as less than 1% fee, there is still ample borrow liquidity to build bearish positions even further.  However, we all know how the last battle with Mr. Icahn turned out on the other side of his bet.   

Want deeper insight into the above analysis?Contact:
Director, S3 Partners
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.

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