4/30/13

Columbia Business School held this year's 6th Pershing Square Challenge. The winning team got $100k.

This year's panel of judges included: Bill Ackman (Pershing Square), AJ Agarwal (Blackstone Group), Craig Effron (Scoggin Capital), Mchael Gerstner (MSD Capital), Paul Hilal (Pershing Square), Philip Hilal (Kingdon Capital), Alex Klabin (Senator Investment Group), Dahlia Loeb (Kensai Asset Management), Mick McGuire (Marcato Capital), Billy Rahm (Centerbridge), Jonathan Schwartz (Seneca Capital Investment Partners), and Whitney Tilson (Kase Capital).

The winning team pitched Hertz (HTZ). They made the pitch for HTZ being undervalued and worth $36 per share versus approximately $24 where it currently trades (52% upside). Their thesis revolved around the oligopoly-like nature of the car rental business (industry consolidation), the misunderstood impact of used car pricing, and the unlocking of value on divesting of non-core Equipment Rental business.

Columbia Business School's Pershing Square Challenge

Comments (19)

4/29/13

9 months ago it was at $10/share. I think they're a bit late here.

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In reply to BTbanker
4/29/13

BTbanker:

9 months ago it was at $10/share. I think they're a bit late here.


Do you ever say anything useful and not total bullshit?
In reply to HarvardOrBust
4/29/13

HarvardOrBust:

BTbanker:

9 months ago it was at $10/share. I think they're a bit late here.

Do you ever say anything useful and not total bullshit?


Go ahead and buy it. I don't give a fuck. It's not going to 36.
In reply to BTbanker
4/29/13

BTbanker:

HarvardOrBust:
BTbanker:

9 months ago it was at $10/share. I think they're a bit late here.

Do you ever say anything useful and not total bullshit?

Go ahead and buy it. I don't give a fuck. It's not going to 36.

Haha, BTB I share this feeling as well. Have owned CAR and HTZ for some time in my PA on the back of a similar thesis.
I thought the industry has become less focused on utilization and more focused on price (leisure pricing gets better), thought they would coin more synergies than they guided for on the DTG deal and the HERC spin-off. However, for a number of reasons, I do think a good portion of the thesis has been realized.

"What the wise man does in the beginning, the fool does in the end."

In reply to ixjunitxi
4/30/13

ixjunitxi:

BTbanker:
HarvardOrBust:
BTbanker:

9 months ago it was at $10/share. I think they're a bit late here.

Do you ever say anything useful and not total bullshit?

Go ahead and buy it. I don't give a fuck. It's not going to 36.

Haha, BTB I share this feeling as well. Have owned CAR and HTZ for some time in my PA on the back of a similar thesis.
I thought the industry has become less focused on utilization and more focused on price (leisure pricing gets better), thought they would coin more synergies than they guided for on the DTG deal and the HERC spin-off. However, for a number of reasons, I do think a good portion of the thesis has been realized.

"What the wise man does in the beginning, the fool does in the end."

8.5% 2013 FCF yield including growth capex, additional margin expansion opportunities, really strong business. Seems like a nice compounder to me.

4/30/13

If an interviewer/boss/professor requires you to present a stock pitch, is this the standard length/format?

*at undergrad level, not graduate

"What the hell would I ever say to a gorrilla?

In reply to LiveTopShelf
4/30/13

if you're talking about an ibd interview, then fuck no this is not the standard to live up to. in fact, you'd probably mind fuck your interviewer so badly they'd turn you down immediately

4/30/13

Thanks for sharing. This is quite a pitch!

4/30/13

Can some please explain the 'proceeds from monetizing spin-off' calc in the bottom-left corner of slide 9?

4/30/13

So this is Einhorn-level due diligence.

In reply to LiveTopShelf
4/30/13

LiveTopShelf:

If an interviewer/boss/professor requires you to present a stock pitch, is this the standard length/format?

*at undergrad level, not graduate

Pretty standard, if not a bit short. I did one that was about 125 pages with everything. Honestly got redundant but there were length requirements and had to use all valuation techniques. But ya, twas a quality pitch no doubt, really like how they structured it with gettin to the point, then having the meat and bones in the appendices.

4/30/13

Out of all the things right these guys did, their description of management's strengths really gets me the most enthusiastic about HTZ. From their description of management's background to the summary of performance since their CEO is in place, this presentation focuses more on selling management than it does on the actual financials, and that is a strength in my mind. Going so far to put the valuations in the appendices was a nice touch.

In reply to jameshunt
4/30/13

jameshunt:

Can some please explain the 'proceeds from monetizing spin-off' calc in the bottom-left corner of slide 9?

If you spin-off the Equipment Rental business of Hertz into a separate company then that business will take a debt load with it (equipment rental companies usually operate with substantial leverage - see United Rentals as a pure play example). This will reduce the net debt position of the car rental business hence the proceeds of $2.8bn from the spin assuming 4.2 debt/ebitda leverage of the Equipment Rental business.

4/30/13

Chimp, thanks for the reply.

Not to take away from some impressive analysis, but the case fails to present catalysts. I'd like to see some more thought on why the market will change it's view of Hertz.

In reply to droking7
4/30/13

droking7:

LiveTopShelf:

If an interviewer/boss/professor requires you to present a stock pitch, is this the standard length/format?

*at undergrad level, not graduate

Pretty standard, if not a bit short. I did one that was about 125 pages with everything. Honestly got redundant but there were length requirements and had to use all valuation techniques. But ya, twas a quality pitch no doubt, really like how they structured it with gettin to the point, then having the meat and bones in the appendices.

Lol... so the standard way any pitchbook is structured. This book is decent but it's just what you would do in banking every day, it isn't unbelievably complex analysis.

By no means is this what is expected for an interview or if a professor asks you to present a stock.

If you put together a 125 page book on 1 stock and were outlining your thesis, you substantially wasted your time sir. 125 pages is for obtuse strat alt books with profiles on profiles or for management presentations / CIMs containing superfluous information designed to tie up the buyer's time in the analysis / diligence process.

No way in hell you need 125 pages to pitch a stock sir... It isn't useful at that length.

xoxo

Dirk Dirkenson:
Shut up already. Your mindless, reflexive responses to any critical thought on this are tedious. You're also probably a woman, given the name and "xoxo" signoff, so maybe the lack of judgment is to be expected.
In reply to Louboutins and Leverage
4/30/13

Louboutins and Leverage:

droking7:
LiveTopShelf:

If an interviewer/boss/professor requires you to present a stock pitch, is this the standard length/format?

*at undergrad level, not graduate

Pretty standard, if not a bit short. I did one that was about 125 pages with everything. Honestly got redundant but there were length requirements and had to use all valuation techniques. But ya, twas a quality pitch no doubt, really like how they structured it with gettin to the point, then having the meat and bones in the appendices.

Lol... so the standard way any pitchbook is structured. This book is decent but it's just what you would do in banking every day, it isn't unbelievably complex analysis.

By no means is this what is expected for an interview or if a professor asks you to present a stock.

If you put together a 125 page book on 1 stock and were outlining your thesis, you substantially wasted your time sir. 125 pages is for obtuse strat alt books with profiles on profiles or for management presentations / CIMs containing superfluous information designed to tie up the buyer's time in the analysis / diligence process.

No way in hell you need 125 pages to pitch a stock sir... It isn't useful at that length.

xoxo

For an interview, you should have a 30 sec pitch and an extended 4-5 min depending on what you're interviewing for. If it's IB, I don't think they really give a shit, so the analysis doesn't have to be very in depth. Although, you should know all the major details about the company/thesis.

In reply to HarvardOrBust
4/30/13

HarvardOrBust:

Louboutins and Leverage:
droking7:
LiveTopShelf:

If an interviewer/boss/professor requires you to present a stock pitch, is this the standard length/format?

*at undergrad level, not graduate

Pretty standard, if not a bit short. I did one that was about 125 pages with everything. Honestly got redundant but there were length requirements and had to use all valuation techniques. But ya, twas a quality pitch no doubt, really like how they structured it with gettin to the point, then having the meat and bones in the appendices.

Lol... so the standard way any pitchbook is structured. This book is decent but it's just what you would do in banking every day, it isn't unbelievably complex analysis.

By no means is this what is expected for an interview or if a professor asks you to present a stock.

If you put together a 125 page book on 1 stock and were outlining your thesis, you substantially wasted your time sir. 125 pages is for obtuse strat alt books with profiles on profiles or for management presentations / CIMs containing superfluous information designed to tie up the buyer's time in the analysis / diligence process.

No way in hell you need 125 pages to pitch a stock sir... It isn't useful at that length.

xoxo

For an interview, you should have a 30 sec pitch and an extended 4-5 min depending on what you're interviewing for. If it's IB, I don't think they really give a shit, so the analysis doesn't have to be very in depth. Although, you should know all the major details about the company/thesis.


thx

Dirk Dirkenson:
Shut up already. Your mindless, reflexive responses to any critical thought on this are tedious. You're also probably a woman, given the name and "xoxo" signoff, so maybe the lack of judgment is to be expected.
In reply to Louboutins and Leverage
4/30/13

Louboutins and Leverage:

droking7:
LiveTopShelf:

If an interviewer/boss/professor requires you to present a stock pitch, is this the standard length/format?

*at undergrad level, not graduate

Pretty standard, if not a bit short. I did one that was about 125 pages with everything. Honestly got redundant but there were length requirements and had to use all valuation techniques. But ya, twas a quality pitch no doubt, really like how they structured it with gettin to the point, then having the meat and bones in the appendices.

Lol... so the standard way any pitchbook is structured. This book is decent but it's just what you would do in banking every day, it isn't unbelievably complex analysis.

By no means is this what is expected for an interview or if a professor asks you to present a stock.

If you put together a 125 page book on 1 stock and were outlining your thesis, you substantially wasted your time sir. 125 pages is for obtuse strat alt books with profiles on profiles or for management presentations / CIMs containing superfluous information designed to tie up the buyer's time in the analysis / diligence process.

No way in hell you need 125 pages to pitch a stock sir... It isn't useful at that length.

xoxo

Exactly, that's why I said it was redundant...And 125 pages because of length requirements. It was just standard procedure in order to get an A.

4/30/13

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