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I’m quite sure sometime in the recent past you’ve hired a Hertz hire vehicle.
They are certainly a good option if you need transport in a hurry.
But frankly, I wouldn’t have ever guessed that Hertz would make Elon Musk $36 billion dollars richer in a single day!
And yet, while surprising, my contention is you need to get used to these sorts of headlines moving forward.
While most see the world moving on from its COVID lockdowns and getting back to business, the Property Sharemarket Economics (PSE) team see it another way.
The beginning of the second more speculative half of the 18.6-year Real Estate Cycle.
Read now as I show you why this is so much more important than you may realize.
It’s a story about behavior, not just money.
Over the top.
Back to everyone’s mate Elon Musk and the recent Hertz announcement.
Here is how Bloomberg reported the event:
“Elon Musk’s personal fortune jumped by $36.2 billion Monday after Hertz Global Holdings Inc. placed an order for 100,000 Teslas and filings showed a fresh tranche of options in his moon-shot pay package vested.
It’s the biggest one-day gain in the history of the Bloomberg Billionaires Index, eclipsing Chinese tycoon Zhong Shanshan’s $32 billion surge last year when his bottled-water company, Nongfu Spring Co., went public. Musk’s net worth of $288.6 billion is now greater than the market value of Exxon Mobil Corp. or Nike Inc”.
See how easy it is for some to make billions in 24 hours?
The shares of Tesla didn’t miss out though, rising 13% on the news to make the companies valuation over $1 trillion.
Here’s something you may well have forgotten.
During the depths of the US lockdowns and recession back in 2020, the Hertz company went bankrupt.
That’s right, they went under!
Hertz owned brands like Dollar, Thrifty, and Firefly, was forced to file for bankruptcy and began liquidating its fleet.
It delisted from the NASDAQ and another business casualty of the pandemic.
However, that wasn’t the end of their story.
They were taken over by Knighthead Capital Management and Certares Management, a group of hedge funds. They combined to win the debt auction of Hertz for a cool $6 billion.
They relisted Hertz back onto the NASDAQ and embarked on an ambitious new business strategy to electrify their entire fleet of vehicles worldwide.
A perfect storm, at least from the outside, of reopening’s, worldwide car shortages and a rebound in travel.
Folks, put those real estate cycle lenses on please.
And see what this truly is about.
This behaviour is a land play, pure and simple.
It makes zero sense to spend billions on a fleet of depreciating vehicles.
But to spend the same amount on franchised global salesrooms, charging stations and vehicle maintenance sites, all of which reside on land, makes a lot more sense.
Know this too; this trend is only just getting started.
Now is the time to understand what’s really occurring.
Because not only will these type of over the top acquisitions and mergers increase in numbers moving forward, but the numbers behind them will continue to rise also.
Hertz was bid for and won at auction using borrowed money.
How did they arrange such a sum of borrowed funds?
By using the land that Hertz owned as collateral!
That’s right, land these hedge funds didn’t even own but, should their bid prove successful, would be released to them to facilitate the borrowing.
And credit has never been cheaper than now in history.
Classic second half of the cycle behaviour.
By converting the entire 500,000 global vehicle fleet to electric, Hertz will now offer charging stations to their customers, for free at first but later will be incorporate into the hire fee.
These represent the gains. The economic rent.
Once realised, these gains MUST be captured by the land. Land that the newly relisted Hertz now own.
Just dig that little bit deeper.
You need to learn to look deeper through the headlines when it comes to things like this.
Particularly at this time of the cycle.
Elon Musk’s name attached to any headline will naturally take all the attention.
You can add Tesla’s name to this also.
But I have shown you how spending 20 minutes doing a bit of research can make a world of difference in interpreting the news we are bombarded with every day.
I will be honest with you; I had no idea that Hertz had been bought out and then relisted.
I simply added them to the carnage of the 2020 recession.
And yet, by using my knowledge of the real estate cycle, I reckon I’ve identified a worthwhile listed company to put on my own watchlists moving forward.
I have zero doubt that all things being equal the amount of land I can be exposed to via this company could make it a smart investment.
I know we have another few years of rising land prices around the globe.
And Hertz have offices, charging stations and vehicle maintenance yards all over the world. All sitting on land that is about to have its gains manifested via these new electric vehicles.
You’ll see this via increased earnings now that the company is listed again.
This will result in a rising share price.
Tesla is another while we are at it. And yes, they aren’t a motor vehicle company. They are a real estate technology company at heart.
Look what happened to it with news of this deal?
And we have several years’ worth of credit to be created and speculated against rising land prices?
I will tell you here, Tesla will probably be worth $5 trillion by the time the land market peaks.
Which means its quite possible the share price will double from here, and then double again!
Done in a background of uninhibited credit lending, total speculation, and an environment where life has simply never been better.
I think its time you learnt how to look at the news and the market in general the same way to benefit you and your family.
So, start today and grab yourself a membership to the Boom Bust Bulletin.
Learn the history of the real estate cycle, why it continues to repeat and how best to leverage this knowledge to make the best decisions for yourself and your family, and at the right time too.
Things will go way over the top by the time this ends.
In the meantime, we have profits to make. Start to learn how to identify them.
All for $4 USD a month, amazing value.
Best regards,
Darren J Wilson
and your Property Sharemarket Economics Team
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This content is not personal or general advice. If you are in doubt as to how to apply or even should be applying the content in this document to your own personal situation, we recommend you seek professional financial advice. Feel free to forward this email to any other person whom you think should read it.