Among the phrases that investors hate to hear, “accounting restatements” ranks near the top. #-ad_banner-#At a minimum, it means that a company maintained sloppy accounting standards. Worst case, it means that a fraud was perpetrated, such as a leading sales executive lying about contracts or a financial officer cooking the books. Yet, there can be a silver lining. It can push shares well below intrinsic value to the point that upside results simply from new management cleaning up the mess. That’s the setup in place for Hertz Global Holdings (NYSE: HTZ). Read More
Among the phrases that investors hate to hear, “accounting restatements” ranks near the top. #-ad_banner-#At a minimum, it means that a company maintained sloppy accounting standards. Worst case, it means that a fraud was perpetrated, such as a leading sales executive lying about contracts or a financial officer cooking the books. Yet, there can be a silver lining. It can push shares well below intrinsic value to the point that upside results simply from new management cleaning up the mess. That’s the setup in place for Hertz Global Holdings (NYSE: HTZ). Hertz’s accounting woes began many quarters ago, and as recently as June, appeared to be attributable to manageable missteps, which analysts at RGL Forensics explained here. Hertz didn’t have just one set of math errors to justify; it had a litany of them. At the time, the various accounting issues seemed to fall under the umbrella of improper recognition of various expenses, depreciation and receivables rather than any sort of malfeasance. Nevertheless, many investors stuck around over the summer, expecting an eventual tidy resolution. Yet when… Read More