When shares of Hertz Global Holdings Inc. soared after the company filed for bankruptcy a year ago, finance professionals reacted with a mix of confusion and scorn. A year later, small investors who bet on the company in its distress are getting the last laugh, WSJ Pro Bankruptcy reported. The century-old rental-car giant is poised to mint big gains for loyalists on its way out of bankruptcy. It’s a result that seemed unfathomable when its business unraveled early in the COVID-19 pandemic and another marker of an upside-down year in markets. On May 14, a bankruptcy court approved a winning auction bid that will hand control of Hertz to institutional investors who won a heated competition to buy the company out of bankruptcy as its prospects brightened. Hertz expects stockholders to receive more than $7 a share of value out of the deal, and perhaps as much as $8 a share, as the company emerges from chapter 11. Hertz closed at $5.76 on Tuesday in the over-the-counter market. The New York Stock Exchange delisted the shares in October after determining they were no longer suitable, since the company was in bankruptcy. Driven by individuals trading on apps, Reddit message-board boosters and the boredom of lockdown, financial markets have been on occasion hard to explain this year, including the GameStop Corp. mania, a joke cryptocurrency and a $100 million deli. It’s not surprising that standard bankruptcy practice should also get turned around. Hertz shareholders avoided being wiped out as the company’s prospects recovered to match the bullish outlooks of online traders who piled into the company in June after it filed for bankruptcy protection. Whether or not they were acting irrationally, their view of Hertz ended up closer to reality than the supposed smart money that dumped the stock.
