Legendary activist investor Carl Icahn may see his investment in Hertz lose most of its value after the rental car company filed for bankruptcy.
Hertz filed for Chapter 11 bankruptcy protection last week, citing the impact of the coronavirus pandemic on travel demand. Icahn held nearly 40% of the outstanding shares of the stock, according to FactSet, and it was one of his 10 largest holdings.
The stake was worth about $342 million at the end of the first quarter, according to securities filings, and Icahn's investment fund had bought an additional 11 million shares over those three months. Icahn's stake was worth just under $700 million at the end of 2019, before the pandemic sparked a market sell-off and slammed the travel industry.
Because equity investors are unprotected during bankruptcy proceedings, it is possible that Icahn's entire stake will be wiped out.
Icahn first disclosed a stake in the company in August 2014, and his investment over the years totaled $1.5 billion, according to The Wall Street Journal. Icahn is considering investing more in the company as it emerges from bankruptcy, the Journal reported.
Hertz was trading at more than $90 per share in late July and early August of 2014. The stock is now halted at $2.84 per share.
Representatives for Icahn did not immediately respond to requests for comment.