Self-styled investor activist Carl Icahn has entered the car rental market by disclosing a large 8.5% stake in struggling car rental specialist, Hertz (NYSE:HTZ). Many will recall the recent success of his style of investing; where he buys a large controlling stake in companies he perceives as undervalued and then seeks a seat on the board in an active effort to change the fortunes of the company.
But could he be about to take a wrong turn with his latest purchase? Hertz shares were already at their highest point of $31 for 7 years, having risen from just $1.60 in the wake of the 2008 global credit crisis – certainly, in my opinion, fully valued.
The company then dropped the bombshell of having to restate full year earnings for 2011, whilst in addition to issuing a shock profit warning. Whilst no one can deny the impressive successes Icahn has enjoyed on a historical basis, all investors will tell you: past performance is not indicative of future results.
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