Author Topic: Profiting off Hertz bankruptcy  (Read 2521 times)

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Profiting off Hertz bankruptcy
« on: June 18, 2020, 12:44:36 AM »
I have been vaguely following how Hertz (HTZ) is going bankrupt, but people are still investing in it... pushing up the stock price.  Hertz announced a plan to sell $500 million in new shares, while in bankruptcy, warning potential buyers the shares would probably be worthless.  And the SEC stepped in with concerns that Hertz should address.

Before yesterday I never owned shares of Hertz.  Yesterday, I tried out selling shares I didn't own: selling short, at Interactive Brokers.  I placed a limit order to sell shares, during markets or outside normal trading hours... and logged out.  Next time I logged in, I held a negative number of HTZ shares... it worked!

My understanding is that new investors using Robinhood think they can profit off a company already in bankruptcy.  Hertz and experts all say it's very unlikely.  I didn't invest much, and not out of greed.  My best decisions come from annoyance, not greed.  But I'm also curious about this situation, and if HTZ stock recovers it won't impact me much.

Bankruptcy nearly always wipes out stockholders.  Bondholders become the new owners, and those holding stock are left with nothing.  So by selling HTZ short, I promise to buy shares at a later date, when I expect those shares to be worthless.

I looked at put options of various times to get an idea what the options market expects:
July 19 2020:  $2.00 strike costs $0.90, suggesting $1.10/sh break even 1 month from now
Jan 15 2021:  $2.00 strike costs $1.53, suggesting $0.47/sh break even 7 months from now
Jan 21 2022: $2.00 strike costs $1.75, suggesting $0.25/sh break even 19 months from now

Currently HTZ is $2 per share.  That's odd for a company already in bankruptcy.  What do others think?

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #1 on: June 18, 2020, 01:19:36 AM »
Note especially the warning:
If you're investing in Hertz shares at Robinhood, you might be missing the risk of bankruptcy.

DalioGold10

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Profiting off Hertz bankruptcy
« Reply #2 on: June 18, 2020, 02:13:57 AM »
I have been vaguely following how Hertz (HTZ) is going bankrupt, but people are still investing in it... pushing up the stock price.  Hertz announced a plan to sell $500 million in new shares, while in bankruptcy, warning potential buyers the shares would probably be worthless.  And the SEC stepped in with concerns that Hertz should address.

Before yesterday I never owned shares of Hertz.  Yesterday, I tried out selling shares I didn't own: selling short, at Interactive Brokers.  I placed a limit order to sell shares, during markets or outside normal trading hours... and logged out.  Next time I logged in, I held a negative number of HTZ shares... it worked!

My understanding is that new investors using Robinhood think they can profit off a company already in bankruptcy.  Hertz and experts all say it's very unlikely.  I didn't invest much, and not out of greed.  My best decisions come from annoyance, not greed.  But I'm also curious about this situation, and if HTZ stock recovers it won't impact me much.

Bankruptcy nearly always wipes out stockholders.  Bondholders become the new owners, and those holding stock are left with nothing.  So by selling HTZ short, I promise to buy shares at a later date, when I expect those shares to be worthless.

I looked at put options of various times to get an idea what the options market expects:
July 19 2020:  $2.00 strike costs $0.90, suggesting $1.10/sh break even 1 month from now
Jan 15 2021:  $2.00 strike costs $1.53, suggesting $0.47/sh break even 7 months from now
Jan 21 2022: $2.00 strike costs $1.75, suggesting $0.25/sh break even 19 months from now

Currently HTZ is $2 per share.  That's odd for a company already in bankruptcy.  What do others think?

IMO Hertz is the temporary Bitcoin for young "investors" or "penny stocks" traders or pump and dump investors.
You might get burnt by shorting this share and this has been the lesson of this market crisis. There are many examples sustaining my opinion.

If you really want to gain some profits from playing with Hertz shares, my advice is to bank on its volatility. I suggest going with a straddle options strategy.

MustacheAndaHalf I know we had some disagreements in the past, so please do not be offended by my point of view :)

mrmoonymartian

  • Bristles
  • ***
  • Posts: 287
  • Age: 38
  • Location: Brisbane
Re: Profiting off Hertz bankruptcy
« Reply #3 on: June 18, 2020, 05:25:58 AM »
Yep, high frequency trading will do well. It doesn't matter how many times per second, as long as it resonates with the market.

Stimpy

  • Stubble
  • **
  • Posts: 203
  • Age: 36
  • Location: Middle of Nowhere
Re: Profiting off Hertz bankruptcy
« Reply #4 on: June 18, 2020, 07:46:52 AM »
I've seen a few thing on this... and frankly I am buying it to the MOON!!!!!

Just kidding.

I think some companies, do have a good path forward out of bankruptcy.  HTZ's plan to sell extra worthless shares shows it doesn't.  (As well as other indicators I'm sure.)  Shorting it or in fact any play against the stock is probably a good move.  Though realize that at any point it could halt trading and... that's all she wrote.  Your short = lost money, any stock owed = lost money...  No way around it.

Those whom are playing the stock are 99% likely to lose money.  If it's as I have heard, all the peeps on Robinhood, webull etc.   This will probably end up hurting those trading apps but as all those in the news say, when your young take risks....  HTZ is the embodiment of that!

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #5 on: June 18, 2020, 11:25:35 AM »
MustacheAndaHalf I know we had some disagreements in the past, so please do not be offended by my point of view :)
I mentioned forum rules and moved on, not a problem.

IMO Hertz is the temporary Bitcoin for young "investors" or "penny stocks" traders or pump and dump investors.
You might get burnt by shorting this share and this has been the lesson of this market crisis. There are many examples sustaining my opinion.
My strongest evidence is Hertz itself, warning people their stock is probably worthless.  Apparently 90% of chapter 11 (reorganization) bankruptcies wind up with the stockholders getting nothing.  The other 10% got a little bit of cash back.  So that side of it looks decent for my short position.

Last I checked travel was down -90%, with airports using runways as parking lots for unused planes.  Hertz has offices at most airports, and all of that revenue has gone missing.  So I think Hertz is in deep trouble and the bankruptcy will occur.  But I could be wrong, and I estimated the possible loss when I started.

If you really want to gain some profits from playing with Hertz shares, my advice is to bank on its volatility. I suggest going with a straddle options strategy.
While I haven't traded options before, every time I look, they're too expensive.  Hertz trades just below $2 right now, and the options 1 month from now are looking expensive.  A "call" option is $0.40 and a "put" option is $0.90, for a total cost of $1.30... on a stock costing $2.  Most times I look at options, they are too expensive - the stock needs to move a long ways before an option breaks even.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #6 on: June 18, 2020, 11:34:45 AM »
I've seen a few thing on this... and frankly I am buying it to the MOON!!!!!

Just kidding.
Username checks out?  :)

I think some companies, do have a good path forward out of bankruptcy.  HTZ's plan to sell extra worthless shares shows it doesn't.  (As well as other indicators I'm sure.)  Shorting it or in fact any play against the stock is probably a good move.  Though realize that at any point it could halt trading and... that's all she wrote.  Your short = lost money, any stock owed = lost money...  No way around it.
That's not my understanding, so I wonder who's right.  On Investopedia, they said trading could stop and a short sellers funds could be locked up for awhile,... but ultimately once the stock is declared worthless, the short seller owes $0 to buy shares back.  When I sold the stock short, I immediately received the profits of that sale.  So I already have the profit, now I have an obligation to buy the stock at whatever price later on, hopefully zero.

Those whom are playing the stock are 99% likely to lose money.  If it's as I have heard, all the peeps on Robinhood, webull etc.   This will probably end up hurting those trading apps but as all those in the news say, when your young take risks....  HTZ is the embodiment of that!
Is that a general statement of your views, or do you see a specific path for short sellers to lose money?

Buffaloski Boris

  • Handlebar Stache
  • *****
  • Posts: 2080
  • Thereís a voter born every minute.
Re: Profiting off Hertz bankruptcy
« Reply #7 on: June 18, 2020, 12:28:27 PM »
I see a more straightforward way of profiting: buy one of their used cars. They seem to be $2-5K less than other comparable vehicles.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #8 on: June 19, 2020, 01:56:20 AM »
I see a more straightforward way of profiting: buy one of their used cars. They seem to be $2-5K less than other comparable vehicles.
Rental cars get driven harder than other cars, so I would expect they are in worse condition.  If you think a used car salesman is giving you $5,000 for free... buyer beware!

Most bankruptcies end badly.  There's a good chance, from my biased perspective, that Hertz finds itself in an environment where it simply can't make money.  In that case, reorganizing debts won't work, and it will change to chapter 7 (liquidation) bankruptcy.

For those willing to wait a bit longer, Hertz used cars might be sold at an even greater discount during a "going out of business sale" for the entire used car fleet.

celerystalks

  • Stubble
  • **
  • Posts: 145
Re: Profiting off Hertz bankruptcy
« Reply #9 on: June 19, 2020, 05:54:51 AM »
Bankruptcy court is not a nice friendly place which assigns blame to the proper parties and endeavors to try to make everyone whole.  Generally the fiduciary duty that management owes to pre-petition equity holders is completely ignored because equity is presumed to be completely wiped out. Ordinarily equity does not even get an official committee; and when they do they are not dealt with fairly by the other classes of creditors. During bankruptcy the incorporated entity is run for the benefit of secured creditors, upper management, unsecured creditors, and labor, and basically in that order.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1622
  • Age: 48
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Profiting off Hertz bankruptcy
« Reply #10 on: June 19, 2020, 07:08:45 AM »
@MustacheAndaHalf

I'm an experienced short seller and I have a warning for you.  You need to check the "borrow fees" at Interactive Brokers.  Use the "SLB list" from the support menu.  When you short a stock, you pay a fee, like an interest rate, to the lender.  For companies in bankruptcy, that fee can often be hundreds of percent per year.  You can check your account information in the phone app to see what interest you have already been charged month to date.  It is hard to make money on popular shorts.   The options plays are probably better as there is no borrow fee, just the bid/ask spread to deal with.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4156
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Profiting off Hertz bankruptcy
« Reply #11 on: June 19, 2020, 07:41:56 AM »
I see a more straightforward way of profiting: buy one of their used cars. They seem to be $2-5K less than other comparable vehicles.
Rental cars get driven harder than other cars, so I would expect they are in worse condition.  If you think a used car salesman is giving you $5,000 for free... buyer beware!

Most bankruptcies end badly.  There's a good chance, from my biased perspective, that Hertz finds itself in an environment where it simply can't make money.  In that case, reorganizing debts won't work, and it will change to chapter 7 (liquidation) bankruptcy.

For those willing to wait a bit longer, Hertz used cars might be sold at an even greater discount during a "going out of business sale" for the entire used car fleet.

I don't know about that.  I know it's frequently joked about that rentals are driven hard, but harder than most idiots drive their own vehicles? Also do most people get weekly or daily inspections performed on their vehicle like a rental car does?  I mean even when that car logs 50k miles in short order they are inspecting it and making sure it's in good working order before letting the next person rent it.  And if someone does abuse it it gets addressed in short order rather than allowing the problem to languish for years. 

Our last vehicle purchase was a rental car.  Worked out really well for us because the car was only a couple years old, and had like 80k miles on it.  So it's still relatively new age-wise, and had all the expensive miles already driven out of it, which is perfect for a mustachian planning to keep the car for a long time and not put too many miles on it. 


As for Hertz, I don't know, the whole situation seems bonkers to me.  I don't get how you can be in bad financial shape, admit you are in bad financial shape and are going to declare bankruptcy, and then people buy up your stock like crazy.  I'm going to avoid the whole situation.  Maybe wait for that fleet sale and buy me up a discounted car to replace my other aging vehicle. 

Stimpy

  • Stubble
  • **
  • Posts: 203
  • Age: 36
  • Location: Middle of Nowhere
Re: Profiting off Hertz bankruptcy
« Reply #12 on: June 19, 2020, 08:06:44 AM »
Those whom are playing the stock are 99% likely to lose money.  If it's as I have heard, all the peeps on Robinhood, webull etc.   This will probably end up hurting those trading apps but as all those in the news say, when your young take risks....  HTZ is the embodiment of that!
Is that a general statement of your views, or do you see a specific path for short sellers to lose money?
Had to go back and look, and full disclosure, don't do shorts so I wasn't aware of how they would work for the de-listing effort.  Was relying on a flawed article where apparently they don't understand shorts either..... 

More research says you get to keep your money.  But I would still be wary.  I don't expect them to be trading in a few weeks but miracles do occasionally happen.

PDXTabs

  • Handlebar Stache
  • *****
  • Posts: 1985
  • Age: 37
  • Location: Portland, OR, USA
Re: Profiting off Hertz bankruptcy
« Reply #13 on: June 19, 2020, 09:24:25 AM »
I see a more straightforward way of profiting: buy one of their used cars. They seem to be $2-5K less than other comparable vehicles.
Rental cars get driven harder than other cars, so I would expect they are in worse condition.  If you think a used car salesman is giving you $5,000 for free... buyer beware!

  • It's supply and demand. If they need to liquidate their fleet while people are working from home en-mass it will obviously depress prices.
  • I don't know about that, all my rental car miles are on the freeway.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #14 on: June 19, 2020, 10:35:10 AM »
@MustacheAndaHalf

I'm an experienced short seller and I have a warning for you.  You need to check the "borrow fees" at Interactive Brokers.  Use the "SLB list" from the support menu.  When you short a stock, you pay a fee, like an interest rate, to the lender.  For companies in bankruptcy, that fee can often be hundreds of percent per year.  You can check your account information in the phone app to see what interest you have already been charged month to date.  It is hard to make money on popular shorts.   The options plays are probably better as there is no borrow fee, just the bid/ask spread to deal with.
Wow, I see what you mean.  On their website, I clicked "support" and "SLB" and searched for "HTZ" on the "NYSE" exchange.  At the bottom of the page is a list of recent "Mean Rates Rebate / Fee".  The recent rate for HTZ is -196% (per year?).  It sounds like they are charging 0.5% per day...

Thanks for the brief education on short selling during bankruptcy.  Based on what you describe, and being able to see the unbelievable interest rates for myself, I'm closing out the position now.  My goal was partly to act on the situation, and partly to learn.

A few days ago I "sold short" HTZ stock at $2.09/share, and just now closed out the position at $1.78/share.  I'll be watching for Interactive Broker's fees to show up at some point, costing about 1% for 2 days ($0.02/share).

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #15 on: June 19, 2020, 10:44:19 AM »
@Financial.Velociraptor
Thanks again - I agreed with your post and closed out the HTZ position.

I suspect I'll have to ask questions about options somewhere else, like reddit.  From what I can tell, options are very expensive.  Take one of the large "tech" companies, Visa.  Call options for 12 months from now, at the money, cost about 12% of the stock price.  If Visa shares go up +12% in one year, an option holder just breaks even.  And I see that fairly consistency, making me think options are too expensive, but I probably don't know what I'm talking about.

Regarding Hertz in particular, July 24 "put" options seem expensive.  The option to "put" at $2 costs $1.50, so at current prices a -71% decline would be break even for an option holder.  The out of the money put option at $1.50 costs $0.60, which still requires a -49% drop to break even.

I find options useful for getting predictions about stocks and volatility, but not for buying.  Some of the more high performing stocks or ETF options might lure me in, however.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #16 on: June 19, 2020, 10:54:10 AM »
I see a more straightforward way of profiting: buy one of their used cars. They seem to be $2-5K less than other comparable vehicles.
Rental cars get driven harder than other cars, so I would expect they are in worse condition.  If you think a used car salesman is giving you $5,000 for free... buyer beware!
I don't know about that.  I know it's frequently joked about that rentals are driven hard, but harder than most idiots drive their own vehicles? Also do most people get weekly or daily inspections performed on their vehicle like a rental car does?  I mean even when that car logs 50k miles in short order they are inspecting it and making sure it's in good working order before letting the next person rent it.  And if someone does abuse it it gets addressed in short order rather than allowing the problem to languish for years. 

Our last vehicle purchase was a rental car.  Worked out really well for us because the car was only a couple years old, and had like 80k miles on it.  So it's still relatively new age-wise, and had all the expensive miles already driven out of it, which is perfect for a mustachian planning to keep the car for a long time and not put too many miles on it. 
Sounds like you researched this more than I did, so there's probably value to be had in rental car purchases.  To me, 40k miles/year is more mileage than average and represents added wear and tear.  They have used up more of the car warranty with those miles.  But I also agree it's a very mustacian thing to take a car others discount, and get value out of it.

We don't agree on the quality of inspections given by rental car workers, but that's fine.  :)

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4156
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Profiting off Hertz bankruptcy
« Reply #17 on: June 19, 2020, 12:58:05 PM »
I see a more straightforward way of profiting: buy one of their used cars. They seem to be $2-5K less than other comparable vehicles.
Rental cars get driven harder than other cars, so I would expect they are in worse condition.  If you think a used car salesman is giving you $5,000 for free... buyer beware!
I don't know about that.  I know it's frequently joked about that rentals are driven hard, but harder than most idiots drive their own vehicles? Also do most people get weekly or daily inspections performed on their vehicle like a rental car does?  I mean even when that car logs 50k miles in short order they are inspecting it and making sure it's in good working order before letting the next person rent it.  And if someone does abuse it it gets addressed in short order rather than allowing the problem to languish for years. 

Our last vehicle purchase was a rental car.  Worked out really well for us because the car was only a couple years old, and had like 80k miles on it.  So it's still relatively new age-wise, and had all the expensive miles already driven out of it, which is perfect for a mustachian planning to keep the car for a long time and not put too many miles on it. 
Sounds like you researched this more than I did, so there's probably value to be had in rental car purchases.  To me, 40k miles/year is more mileage than average and represents added wear and tear.  They have used up more of the car warranty with those miles.  But I also agree it's a very mustacian thing to take a car others discount, and get value out of it.

We don't agree on the quality of inspections given by rental car workers, but that's fine.  :)

I mean if the car gets a poor inspection and there is something wrong with it mechanically, it's going to be identified by the customer, probably sooner rather than later.  It does no good for a rental car company to rent out a car on the verge of breaking major components.  It's just going to create massive headaches for everyone involved and damage their reputation.  On the other hand there is no one stopping me from driving my own car with dangerously worn components.  And as always when purchasing a used vehicle you should have it checked out by your own mechanic to verify the integrity of the components. The quality of inspections was at least good enough to get this car through 80k miles without noticeable damage, and be declared in great shape by a mechanic.

They did use up the entire warranty, but with my wife putting on like 3k miles a year onto a toyota I'm not terribly concerned.  The car and company have a great reputation for reliability, and over the course of 10 years of ownership we will likely take it from 80k miles to 110k miles.  I doubt we are going to have major issues during that time frame, and if we do we've been socking money away like crazy and can self insure.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2261
Re: Profiting off Hertz bankruptcy
« Reply #18 on: June 19, 2020, 01:29:32 PM »
I bought put options on Sears (SHLDQ) on 1/12/2018. I got the longest duration that was available - Jan 17, 2020 - and picked the $3 strike. I paid $1.88 for the right to sell SHLDQ at $3 in a couple years. I was tempted to go "all in" but decided to make this a very small learner position.

What happened next astounded me.

As bankruptcy became more and more likely, the stock just trended lower, with massive volatility (e.g. +10% days). The downward trend was very slow. As in, I was intermittently underwater from time decay! Recall that I paid a huge amount of time value for these options.

Money from the sale of their store brands was long ago burnt. The balance sheet showed negative equity. There was talk about how they couldn't get financing. Meanwhile, Eddie Lampert was sucking it dry like a vampire. De-listing was imminent. For all rational reasons, the stock was worthless. Still, just a slow gradual downward trend with lots of chop.

My options had appreciated, and their price volatility was relatively low, but I started to worry some idiot was going to buy the company for a premium. That was the only rationale for the stock to have any value. Vendors were cutting them off for non-payment. Sales were plummeting. I walked through my local store and it was a mess, which made me feel a little bit better. The long glide downward continued.

Finally, they declared bankruptcy on October 15, 2018! Shortly thereafter, the stock experienced a run-up that may have been a short squeeze, going from $0.20 to $1.24 in just four months. Then the long, slow descent resumed as the lawyers feasted on the remaining flesh. After delisting, no additional options could be purchased - they could only be sold to the market maker. That meant I was unable to roll my bet to a later date, or double down. I could only hold or get out. I held because I was convinced the true stock value should be zero.

In October 2019, I placed a stink bid to sell my $3 strike puts for $2.90 and amazingly the order went through a couple of days later! Shortly thereafter, SHLDQ went back up into the $0.20 range where it somehow remains today. My profit of 54% in 22 months is impressive, but I can see how it is possible to lose money making the correct bet on collapsing companies. It helped that I could drop in on my local store and watch the decline of the business instead of just reading the financial news. In hindsight, I would be a millionaire had I gone "all in", but I wonder if I could have stomached the irrational price moves with my whole nest egg at stake. The irrationality of the market can strike fear into the hearts of investors who try to be rational.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #19 on: June 19, 2020, 09:26:59 PM »
ChpBstrd - It's really interesting how you started paying $1.88 and sold for $2.90 almost 2 years later.  Sears stock had to fall -63% to break even on that put option, which is the kind of thing that scares me away.  But like your choice, I'd prefer long dated options that use less leverage but also decay in value more slowly.

Stimpy - What I didn't know was the cost of shorting bankrupt stocks:
0.5% per day... 3.5% per week... 16% per month... 196% per year.

PDXTabs - Agreed, when a forced liquidation of assets happens, they don't get full value.  Last I checked HTZ stock, it listed 0.20 price/book, meaning the book value was about $0.40/share.  Having to sell assets off quickly will drive that even lower, and all of it is likely to go to bondholders.

frugalnacho - In any event, rental cars are sold at a discount, which I think reflects customers who place a lower value on them.

marty998

  • Walrus Stache
  • *******
  • Posts: 7013
  • Location: Sydney, Oz
Re: Profiting off Hertz bankruptcy
« Reply #20 on: June 20, 2020, 03:19:19 AM »
I've seen a few thing on this... and frankly I am buying it to the MOON!!!!!

Just kidding.

I think some companies, do have a good path forward out of bankruptcy.  HTZ's plan to sell extra worthless shares shows it doesn't.  (As well as other indicators I'm sure.)  Shorting it or in fact any play against the stock is probably a good move.  Though realize that at any point it could halt trading and... that's all she wrote.  Your short = lost money, any stock owed = lost money...  No way around it.

Those whom are playing the stock are 99% likely to lose money.  If it's as I have heard, all the peeps on Robinhood, webull etc.   This will probably end up hurting those trading apps but as all those in the news say, when your young take risks....  HTZ is the embodiment of that!

Youngsters taking risks lol. We had an equivalent of this down under in 2008-10. It was called Brisconnections.

The Government awarded a private consortium a concession to build and operate a toll road in Brisbane Australia. For the purpose of this post I'll avoid mentioning the alledged corruption involved in that contract. The shares were partly paid $1 at IPO and 2 x $1 instalments callable in several years time as construction of the road progresses and funds are required. A shareholder is liable to be called for that $2 at anytime, and you buy the stock on market knowing that it comes with that liability - it even had a special market code to indicate that fact.

In the meantime, construction is largely debt funded (with interest paid from the shareholder funds.... note the whole project is underwritten by rather optimistic traffic usage projections and toll collections which were unlikely to eventuate).

Brisconnections lists at $1 and on day 1 falls 60%. It continues falling in the subsequent months all they way down through 10c, 1c and finally 0.1c.

At that point a whole bunch of day traders jump on board, because every time it jumped from 0.1c to 0.2c there was a 100% gain to be had. Kids were hoovering up millions of shares, a $10k purchase would get you 10,000,000 shares, (with an attendant $20 million liability).

The Board started getting concerned and wrote to all holders reminding them of their obligations for the remaining instalments. It didn't work... one youngster had amassed over a 5% substantial shareholding of the Company. At which point the investment banks started getting nervous and court action ensued. That young investor ended up negotiating to sell his stock to the construction company building the tunnel, who were keen to stem the damage being caused by the rolling PR disaster.

You can imagine how many holders went bankrupt as the Company enforced its rights when the call notice was made. Many pleaded ignorance, many couldn't sell out in time. Some "transferred" their shares to fictitious parties like Mr Humphrey B. Bear to try avoid liability. Up to 70% of investors defaulted on the second $1 instalment, and their shares could not even be auctioned off. You couldn't pay people to take them.

The Company was eventually placed into administration, collapsing under the weight of $3.5 billion of debt.

The tunnel opened in 2012. Everyone's a winner expect the initial investors and the retail punters.
« Last Edit: June 20, 2020, 03:26:43 AM by marty998 »

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1622
  • Age: 48
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Profiting off Hertz bankruptcy
« Reply #21 on: June 20, 2020, 08:07:13 AM »
@Financial.Velociraptor
Thanks again - I agreed with your post and closed out the HTZ position.

I suspect I'll have to ask questions about options somewhere else, like reddit.  From what I can tell, options are very expensive.  Take one of the large "tech" companies, Visa.  Call options for 12 months from now, at the money, cost about 12% of the stock price.  If Visa shares go up +12% in one year, an option holder just breaks even.  And I see that fairly consistency, making me think options are too expensive, but I probably don't know what I'm talking about.

Regarding Hertz in particular, July 24 "put" options seem expensive.  The option to "put" at $2 costs $1.50, so at current prices a -71% decline would be break even for an option holder.  The out of the money put option at $1.50 costs $0.60, which still requires a -49% drop to break even.

I find options useful for getting predictions about stocks and volatility, but not for buying.  Some of the more high performing stocks or ETF options might lure me in, however.

@MustacheAndaHalf

Options are very expensive at the moment relative to their historical norm.  When fear is high in the market (i.e. the ^VIX is "high"), premiums plump up.  Premiums also plump up on individual stocks when fear is high, see the ChpBstrd's SHLD play (company was on verge of bankruptcy and traders bid the puts up to insane levels). 

The good news it is a fantastic time to be a put SELLER.  I'm making redonkulous annualized returns to stink bid stocks I want to own.  Upon assignment, I'm making similar crazy returns writing out of the money covered calls.  In "normal" markets, I like to play both ends against the middle and buy deep in the money spreads so that I make a "good" return while taking on several percent downside protection from a move against me in the underlying stock price.

There are a lot of levers you can pull to use options to reduce your risk instead of create risk.  I'll leave that for an options specific board elsewhere as I don't want to enrage the index or else crowd here.  Many of them already think I'm the highest form of heretic.

Buffaloski Boris

  • Handlebar Stache
  • *****
  • Posts: 2080
  • Thereís a voter born every minute.
Re: Profiting off Hertz bankruptcy
« Reply #22 on: June 20, 2020, 12:42:33 PM »
@Financial.Velociraptor
Thanks again - I agreed with your post and closed out the HTZ position.

I suspect I'll have to ask questions about options somewhere else, like reddit.  From what I can tell, options are very expensive.  Take one of the large "tech" companies, Visa.  Call options for 12 months from now, at the money, cost about 12% of the stock price.  If Visa shares go up +12% in one year, an option holder just breaks even.  And I see that fairly consistency, making me think options are too expensive, but I probably don't know what I'm talking about.

Regarding Hertz in particular, July 24 "put" options seem expensive.  The option to "put" at $2 costs $1.50, so at current prices a -71% decline would be break even for an option holder.  The out of the money put option at $1.50 costs $0.60, which still requires a -49% drop to break even.

I find options useful for getting predictions about stocks and volatility, but not for buying.  Some of the more high performing stocks or ETF options might lure me in, however.

@MustacheAndaHalf

Options are very expensive at the moment relative to their historical norm.  When fear is high in the market (i.e. the ^VIX is "high"), premiums plump up.  Premiums also plump up on individual stocks when fear is high, see the ChpBstrd's SHLD play (company was on verge of bankruptcy and traders bid the puts up to insane levels). 

The good news it is a fantastic time to be a put SELLER.  I'm making redonkulous annualized returns to stink bid stocks I want to own.  Upon assignment, I'm making similar crazy returns writing out of the money covered calls.  In "normal" markets, I like to play both ends against the middle and buy deep in the money spreads so that I make a "good" return while taking on several percent downside protection from a move against me in the underlying stock price.

There are a lot of levers you can pull to use options to reduce your risk instead of create risk.  I'll leave that for an options specific board elsewhere as I don't want to enrage the index or else crowd here.  Many of them already think I'm the highest form of heretic.

@Financial.Velociraptor : I've not seen you around much lately.  I missed you! Don't be a stranger.  You're a rare voice, and sometimes even one of wisdom. :-p

Both of you are being teases.  Please explain this option strategy. 

(Heresy, shmeresy.  You had your "simple path to wealth" secret decoder ring yanked long ago.)     
« Last Edit: June 20, 2020, 03:39:08 PM by Buffaloski Boris »

maizefolk

  • Magnum Stache
  • ******
  • Posts: 4708
Re: Profiting off Hertz bankruptcy
« Reply #23 on: June 20, 2020, 01:32:18 PM »
marty998, that's a fascinating story!

When I've been involved in companies where shareholders were putting money into the company in tranches, the only penalty for not providing the additional money when it was "called" by the company was the the investor lost their shares.

spartana

  • Handlebar Stache
  • *****
  • Posts: 1673
  • FIREd at 36? Or maybe it was 42?
Re: Profiting off Hertz bankruptcy
« Reply #24 on: June 20, 2020, 03:34:36 PM »
I see a more straightforward way of profiting: buy one of their used cars. They seem to be $2-5K less than other comparable vehicles.
Rental cars get driven harder than other cars, so I would expect they are in worse condition.  If you think a used car salesman is giving you $5,000 for free... buyer beware!

Most bankruptcies end badly.  There's a good chance, from my biased perspective, that Hertz finds itself in an environment where it simply can't make money.  In that case, reorganizing debts won't work, and it will change to chapter 7 (liquidation) bankruptcy.

For those willing to wait a bit longer, Hertz used cars might be sold at an even greater discount during a "going out of business sale" for the entire used car fleet.

I don't know about that.  I know it's frequently joked about that rentals are driven hard, but harder than most idiots drive their own vehicles? Also do most people get weekly or daily inspections performed on their vehicle like a rental car does?  I mean even when that car logs 50k miles in short order they are inspecting it and making sure it's in good working order before letting the next person rent it.  And if someone does abuse it it gets addressed in short order rather than allowing the problem to languish for years. 

Our last vehicle purchase was a rental car.  Worked out really well for us because the car was only a couple years old, and had like 80k miles on it.  So it's still relatively new age-wise, and had all the expensive miles already driven out of it, which is perfect for a mustachian planning to keep the car for a long time and not put too many miles on it. 


As for Hertz, I don't know, the whole situation seems bonkers to me.  I don't get how you can be in bad financial shape, admit you are in bad financial shape and are going to declare bankruptcy, and then people buy up your stock like crazy.  I'm going to avoid the whole situation.  Maybe wait for that fleet sale and buy me up a discounted car to replace my other aging vehicle.
Plus a lot of the cars Hertz is currently selling have 5k to 10k miles on them. Most 2020s. Just gotta look around on their various Rent2buy sites (current rentals) vs their car lots which have older higher mileage cars although they are certified and come with a hi-back and 12 month warranty. Those may be useless if they do go Chap 7. Unfortunately their prices have already increased. I don't know why but a far I was renting from them (and had no intention of buying) but which they had put up for sale started out at $16k (2019 Dodge Journey Crossroads AWD with 30k miles) and now, after several months of rental and more miles and use, they are asking $18.5k. Maybe more demand now that they are in bankruptcy.

marty998

  • Walrus Stache
  • *******
  • Posts: 7013
  • Location: Sydney, Oz
Re: Profiting off Hertz bankruptcy
« Reply #25 on: June 20, 2020, 05:28:38 PM »
marty998, that's a fascinating story!

When I've been involved in companies where shareholders were putting money into the company in tranches, the only penalty for not providing the additional money when it was "called" by the company was the the investor lost their shares.

Yeah because in normal circumstances those shares get auctioned off and life goes on. But because everyone knew this company was not long for this world, there were simply no takers for those shares, so the company had to go after the holders who defaulted.

I'm only relaying this story to make the point that history does repeat. Over and over again. Every market boom and bust draws in all those who haven't had their fingers burned before.

The circumstances might change but the underlying theme is the same. Fast profits come at a terribly high price, especially when you find yourself without a chair when the music stops.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #26 on: June 21, 2020, 07:29:23 AM »
@Financial.Velociraptor -
I became an efficient markets heretic on March 8, 2020.  I saw every country with a serious COVID-19 problem, while the U.S. stock market ranked it as a mild problem.  It helps that the experts were on my side, making pessimistic predictions that the markets ignored.  I miss your view point on the forums.

I think the bigger problem isn't people disagreeing with you, it's the scarcity of threads like this, where options and shorting are key elements of the topic.


@marty998 -
I'm not sure, but suspect in the U.S. negative dividends are probably illegal.  Wouldn't negative dividends open the door to scam artists, who could offer stock that robs people of their money?  Very odd situation, in my view.


@Buffaloski Boris - I don't have an option strategy.  They seem too expensive to me, and I haven't bought any.  From that naive vantage point, I'd say learn poker bankroll skills before you start with options, and you'll avoid lots of pain like oversized bets on options.  Maybe there's enough interest for a "heretics options" thread?

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1622
  • Age: 48
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Profiting off Hertz bankruptcy
« Reply #27 on: June 21, 2020, 09:44:29 AM »
@Financial.Velociraptor : I've not seen you around much lately.  I missed you! Don't be a stranger.  You're a rare voice, and sometimes even one of wisdom. :-p

Both of you are being teases.  Please explain this option strategy. 

(Heresy, shmeresy.  You had your "simple path to wealth" secret decoder ring yanked long ago.)   

@Buffaloski Boris

Thanks for the kind words.

I'd be glad to discuss options strategies.  But it wouldn't do to have a unorganized dump of everything I think/know. Do you have a specific options area you'd like me to discuss?  A 200 page manifesto on all things options would annoy the ever loving heck out of the indexers!

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1622
  • Age: 48
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Profiting off Hertz bankruptcy
« Reply #28 on: June 21, 2020, 09:45:32 AM »
@Financial.Velociraptor -
I became an efficient markets heretic on March 8, 2020.  I saw every country with a serious COVID-19 problem, while the U.S. stock market ranked it as a mild problem.  It helps that the experts were on my side, making pessimistic predictions that the markets ignored.  I miss your view point on the forums.

I think the bigger problem isn't people disagreeing with you, it's the scarcity of threads like this, where options and shorting are key elements of the topic.


Thanks for the kind words.  I'll try to ignore the slings and arrows going forward.

marty998

  • Walrus Stache
  • *******
  • Posts: 7013
  • Location: Sydney, Oz
Re: Profiting off Hertz bankruptcy
« Reply #29 on: June 21, 2020, 02:49:49 PM »

@marty998 -
I'm not sure, but suspect in the U.S. negative dividends are probably illegal.  Wouldn't negative dividends open the door to scam artists, who could offer stock that robs people of their money?  Very odd situation, in my view.

I donít think I ever mentioned negative dividends? The only situation Iím aware of of negative dividends is short selling where you have to pay the value of the dividend to whoever you borrowed the stock from...

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #30 on: June 21, 2020, 03:57:27 PM »
@marty998 -
I'm not sure, but suspect in the U.S. negative dividends are probably illegal.  Wouldn't negative dividends open the door to scam artists, who could offer stock that robs people of their money?  Very odd situation, in my view.
I donít think I ever mentioned negative dividends? The only situation Iím aware of of negative dividends is short selling where you have to pay the value of the dividend to whoever you borrowed the stock from...
No, you didn't mention them, but that's how I read this earlier post:

The Government awarded a private consortium a concession to build and operate a toll road in Brisbane Australia ... The shares were partly paid $1 at IPO and 2 x $1 instalments callable in several years time as construction of the road progresses and funds are required. A shareholder is liable to be called for that $2 at anytime ...
If I buy IPO shares, and I owe $2 later, I translate that into "-$2 dividend" at an unspecified later date.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #31 on: August 21, 2020, 08:52:58 AM »
@MustacheAndaHalf

I'm an experienced short seller and I have a warning for you.  You need to check the "borrow fees" at Interactive Brokers.  Use the "SLB list" from the support menu.  When you short a stock, you pay a fee, like an interest rate, to the lender.  For companies in bankruptcy, that fee can often be hundreds of percent per year.  You can check your account information in the phone app to see what interest you have already been charged month to date.  It is hard to make money on popular shorts.   The options plays are probably better as there is no borrow fee, just the bid/ask spread to deal with.
Wow, I see what you mean.  On their website, I clicked "support" and "SLB" and searched for "HTZ" on the "NYSE" exchange.  At the bottom of the page is a list of recent "Mean Rates Rebate / Fee".  The recent rate for HTZ is -196% (per year?).  It sounds like they are charging 0.5% per day...

Thanks for the brief education on short selling during bankruptcy.  Based on what you describe, and being able to see the unbelievable interest rates for myself, I'm closing out the position now.  My goal was partly to act on the situation, and partly to learn.

A few days ago I "sold short" HTZ stock at $2.09/share, and just now closed out the position at $1.78/share.  I'll be watching for Interactive Broker's fees to show up at some point, costing about 1% for 2 days ($0.02/share).
I meant to look up this information earlier, but just encountered it today.  During my 2 day short position on HTZ shares (which was in bankruptcy), Interactive Brokers charged me 1.15% per day.  So it was even worse than the 0.5% I had assumed earlier.  I got lucky: my profit was significantly higher than that, but could have gone either way in 2 days.

It's odd - Interactive Brokers has the best margin loan rates at 1.59% per year.  But when it comes to loans on a short sale, they think 1.15% per day is a competitive rate.  I'm still confused how both of those things occur within the same company.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1622
  • Age: 48
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Profiting off Hertz bankruptcy
« Reply #32 on: August 21, 2020, 03:58:04 PM »
@MustacheAndaHalf

I'm an experienced short seller and I have a warning for you.  You need to check the "borrow fees" at Interactive Brokers.  Use the "SLB list" from the support menu.  When you short a stock, you pay a fee, like an interest rate, to the lender.  For companies in bankruptcy, that fee can often be hundreds of percent per year.  You can check your account information in the phone app to see what interest you have already been charged month to date.  It is hard to make money on popular shorts.   The options plays are probably better as there is no borrow fee, just the bid/ask spread to deal with.
Wow, I see what you mean.  On their website, I clicked "support" and "SLB" and searched for "HTZ" on the "NYSE" exchange.  At the bottom of the page is a list of recent "Mean Rates Rebate / Fee".  The recent rate for HTZ is -196% (per year?).  It sounds like they are charging 0.5% per day...

Thanks for the brief education on short selling during bankruptcy.  Based on what you describe, and being able to see the unbelievable interest rates for myself, I'm closing out the position now.  My goal was partly to act on the situation, and partly to learn.

A few days ago I "sold short" HTZ stock at $2.09/share, and just now closed out the position at $1.78/share.  I'll be watching for Interactive Broker's fees to show up at some point, costing about 1% for 2 days ($0.02/share).
I meant to look up this information earlier, but just encountered it today.  During my 2 day short position on HTZ shares (which was in bankruptcy), Interactive Brokers charged me 1.15% per day.  So it was even worse than the 0.5% I had assumed earlier.  I got lucky: my profit was significantly higher than that, but could have gone either way in 2 days.

It's odd - Interactive Brokers has the best margin loan rates at 1.59% per year.  But when it comes to loans on a short sale, they think 1.15% per day is a competitive rate.  I'm still confused how both of those things occur within the same company.

@MustacheAndaHalf

The borrow rate is actually more competitive at IB than anywhere else.  It's a supply and demand issue.  There are a finite number of shares to borrow and a well nigh infinite number of people wanting to short bankrupt companies.  Shares get "hard to borrow" and you have to pay a premium earn the right.  Fidelity might have charged you 2% a day. 

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #33 on: August 22, 2020, 12:37:07 AM »
...
It's odd - Interactive Brokers has the best margin loan rates at 1.59% per year.  But when it comes to loans on a short sale, they think 1.15% per day is a competitive rate.  I'm still confused how both of those things occur within the same company.
The borrow rate is actually more competitive at IB than anywhere else.  It's a supply and demand issue.  There are a finite number of shares to borrow and a well nigh infinite number of people wanting to short bankrupt companies.  Shares get "hard to borrow" and you have to pay a premium earn the right.  Fidelity might have charged you 2% a day.
Thanks for the explanation, which upends my assumption that 1.15% per day was a bad rate solely because it's staggeringly high.

Note for 1.15% I assumed no compounding, that they simply charge 1.15% per day, without compounding.  I'm not sure if 100 days would result in a 115% in simple interest or 214% in compounded interest.

Another supply problem with bankrupt companies: who is still holding the shares?  I imagine it's people hopeful those shares go dramatically upwards in value.  So the opposite of their approach is selling the shares, which is why many might not agree to loan / sell their shares to short sellers.

bermudasq

  • 5 O'Clock Shadow
  • *
  • Posts: 21
Re: Profiting off Hertz bankruptcy
« Reply #34 on: August 27, 2020, 02:17:34 PM »

I'd be glad to discuss options strategies.  But it wouldn't do to have a unorganized dump of everything I think/know. Do you have a specific options area you'd like me to discuss?  A 200 page manifesto on all things options would annoy the ever loving heck out of the indexers!

Every time I see you post, I wish I could skip ahead to having your knowledge.  I made over 400% buying S&P (SPY) LEAP options after the COVID crash.   I invested only money I didn't mind losing and I had a pretty good sense that the market would recover before my 2 year options expired.  But, I'm playing in the kiddie pool compared to your investment strategies.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2261
Re: Profiting off Hertz bankruptcy
« Reply #35 on: August 28, 2020, 08:47:50 AM »

I'd be glad to discuss options strategies.  But it wouldn't do to have a unorganized dump of everything I think/know. Do you have a specific options area you'd like me to discuss?  A 200 page manifesto on all things options would annoy the ever loving heck out of the indexers!

Every time I see you post, I wish I could skip ahead to having your knowledge.  I made over 400% buying S&P (SPY) LEAP options after the COVID crash.   I invested only money I didn't mind losing and I had a pretty good sense that the market would recover before my 2 year options expired.  But, I'm playing in the kiddie pool compared to your investment strategies.

Sometimes simple wins. The hard part is wrapping one's head around the difference in risk between a long option and a long index fund. The index fund does not have a 50% chance of being worth zero in any timeframe. So when choosing to hold stock vs. use options strategies, both the upside and downside are different.

bermudasq

  • 5 O'Clock Shadow
  • *
  • Posts: 21
Re: Profiting off Hertz bankruptcy
« Reply #36 on: August 28, 2020, 09:31:14 AM »
Sometimes simple wins. The hard part is wrapping one's head around the difference in risk between a long option and a long index fund. The index fund does not have a 50% chance of being worth zero in any timeframe. So when choosing to hold stock vs. use options strategies, both the upside and downside are different.

Yup - the risks and rewards of long term (or short term) options are well within my grasp, but my head starts spinning when I'm faced with all the other option strategies.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1622
  • Age: 48
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Profiting off Hertz bankruptcy
« Reply #37 on: August 28, 2020, 11:36:28 AM »
So, I have a good till canceled order in on long dated HTZ 1.00 puts at 64 cents a share (currently trading for around 70 cents).  I'm putting about a $1,000 at risk.  I figure the chances of HTZ being worth near $0.00 within the next 511 days is approximately 100%.  The premiums are fat but my limit order would still generate a 56% return assuming HTZ goes to nil.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2949
Re: Profiting off Hertz bankruptcy
« Reply #38 on: August 29, 2020, 12:28:49 AM »
Just analyzing this situation out of curiousity...

My brief, ignorant online searches show that chapter 7 bankruptcy, where a company is dissolved, takes 4-6 months.  A reorganization through chapter 11 bankruptcy could take 6-24 months.  Hertz filed for chapter 11, but has stated if conditions don't improve and relief is lacking, it's uncertain if they can stay in business.

Here's the last contract price of $1 puts of various dates and potential profit at $0/share:
2022-Jan-21   0.71 => .29/.71 = +41%
2021-Apr-16   0.48 => .52/.48 = +108%
2021-Jan-15   0.28 => .72/.28 = +257%
2020-Nov-20  0.20 => .80/.20 = +400%
2020-Oct-16   0.10 => .90/.10 = +900%
2020-Sep-25  0.05 => .95/.05 = +1900%

There's a couple ways Hertz could drag things out:
(1) Covid vaccines make airport car rental viable again.  The current estimate is first half of 2021 for widespread vaccination, meaning Hertz would need to survive 8-12 months in order to see it's business prospects pick up.
(2) Hertz employs tens of thousands of people.  Congress might provide a relief bill that includes Hertz, and keeps it going.

Although Hertz filed chapter 11 (change loans and keep going), in current circumstances chapter 7 (out of business) seems likely.  Hertz has no way to make revenue, no certain future date for revenue, and has already been losing money every year for the past 4 years.  It's a great candidate to go under.... but when?

I assume "4-6 months" is from the time of a chapter 7 filing.  Hertz hasn't filed chapter 7 yet, so the clock still needs to start on that.  If Hertz converts to a chapter 7 filing, they still have to sell their vehicle fleet, which will probably go more slowly during Covid-19.  So an unknown amount of time in the future, plus more than 6 months.

Buying HTZ Jan 2022 $1 put options right now costs $0.71 per contract (x100 shares, $71 each).  Buying 15 contracts costs $1065, and if Hertz completes bankruptcy in the next 1.4 years, HTZ shares are $0/share.  In that scenario, each contract is worth $100, or $1500 off a $1065 investment.  So a gain of +40.8% over 1.4 years, or roughly 28% per year to the 1.4th power.

Ah, I forgot the price of buying a contract: although you pay $71 to the writer (or holder) of the contract, Vanguard charges $1 to buy or sell a contract, which adds $30 to the overall investment: $1500 / $1095, or a +37% profit.  Over the 1.4 year time frame, that's bout +25% per year.

Plina

  • Bristles
  • ***
  • Posts: 292
Re: Profiting off Hertz bankruptcy
« Reply #39 on: August 29, 2020, 03:06:00 AM »
Here the national franchise of Hertz is owned by Volvo so the cars seems to normally be sold around 2 k miles and a year. Hertz mostly ownes Volvos, with the exception of the smallest rental version. I would not mind buying a rental cars as you they are still sold from deqlerships with warranties. Personally, I am not drivning it differently then I would do if I owned a car. The 700 USD deductible makes sure of that.

I read an anrticle this summer that the rental car companies had deals that made it possible to return cars when they didnít get rented or to not buy as intended. That resulted in that the fleet of app. 60 000 cars was diminshed to 40000 cars in the beginning of the summer. When the travel restrictions were lifted it didnít take long before most of the fleet was rented out to people who wanted vacationing. I was postponing my decision for a while and as a result could not rent from the closest place as there was a shortage of cars in july. The insurance companies were asking people to postpone repairs to the end of August if not necessary as they had problems to find rental cars,