Shares of car rental company Hertz Global Holdings, Inc. (HTZ) still are trading about 17% lower on the year after being down as much as 35% in mid-October. The company continues to see involvements by a group of activist investors that is pushing through changes, which is affecting HTZ stock.
Last Thursday, Hertz announced the appointment of a new CEO, John Tague, which sent HTZ stock soaring the following day, scoring a technically significant move.
The wind now looks to be at the back of HTZ stock, so if you’re a trader or active investor, you’ll want to pay attention.
In August, activist investor Carl Icahn disclosed that he built up a significant 8.5% stake in Hertz. Icahn is looking to gain seats on the board of the company and engage in talks with management. HTZ stock still is trading about 25% lower since Icahn’s involvement was revealed. However, other investors are involved, too — namely, hedge fund Fir Tree Partners and Jana Partners, the latter of which last week revealed it had upped its stake in HTZ stock from more than 7% to 8.3%.
When the news hit last Nov. 20 that Hertz appointed a new CEO, it was confirmation that activists are succeeding in pushing change after forcing out the old CEO in August.
HTZ Stock Charts
Looking at the multiyear weekly chart, note that the sharp selloff in HTZ stock in September found technical support in early October at the diagonal black line, which had acted as resistance until early 2013. While the stock has bounced meaningfully since on a percentage basis, considering the backdrop of activist investor involvement and the big-picture support level from October, HTZ stock looks to have plenty further upside in coming months.
On the daily chart, after cascading into the Oct. 15 lows, HTZ stock had an intraday selloff on Nov. 14 that was quickly reversed by day’s end and served as a marginal retest of the October lows. The stock then consolidated for another few days below resistance near $22.70 before blasting past this line of resistance last Friday with the 4.5% rally that also came on above-average volume.
Friday’s rally also pushed the stock past its down-sloping 50-day simple moving average (yellow line) for the first time since August. With this technical area of resistance now cleared — and keeping in mind that the stock is very much at the mercy of news around the level of success of activist investors — HTZ stock looks to have a natural upside attraction area near the $26-$27 range, which coincides with the 100- and 200-day simple moving averages (blue and red lines, respectively).
Active investors and traders could consider a trade for follow-through buying on the back of last Friday’s rally into the $26-$27 area, while a drop below $22 could be used as a stop-loss.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
