#Hertz: Newbie Investors, Beware!

Just read this article about the dangers of fee free trading and the ease at which amateur investors buy into value traps where the company knows the stock is worthless.

This case study looks at Rental Car Company, Hertz - with a 19billion debt on the rapidly losing value of its second hand rental cars. The company knew it was going bankrupt, but issued a flood of a billion new shares on the market which less sophisticated investors rapidly lapped up … The money from issuing these new shares, simply went to pay off the debt, with absolutely NO value or equity put back into the business at all…

Basically, the company issued junk shares - using other peoples money to pay off the banks.
The SEC were called in …

An interesting read.

Read the balance sheets guys, DYOR.


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