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Monday, May 3, 2010

One of the Most Amazing Share Price Runs We've Seen, Ever - From a Rental Car Company?

The last 14 months delivered incredible "runs" (3x, 4x, 5x, and better share price recoveries) for countless companies, literally across all sectors as persons realized the world wasn't ending. Perhaps one of the best we've seen -- Dollar Thrifty Automotive Group Inc. (DTG):

Wow - from under $1 when balance sheet worries in late 2008 pressed shares to now $50 amidst a Hertz (HTZ) /Avis (CAR) bidding war for the company.

We're not involved in any of these companies and never seriously considered the space during the downturn, but wanted to point out how quickly circumstances can change. Pretty amazing.

Structural changes over the past decade in the car rental industry would make for an interesting case study -- from what we can surmise (*without in-depth research): M&A shifted the environment from one of intense competition to a seemingly cooperative oligopoly where supply is carefully matched to demand simultaneously by all vendors to manage pricing and margins. We personally had difficulty renting cars over the past year and prices were routinely higher than we expected when we did rent cars. Sound familiar?

Happy investing,

Jeffrey Walkenhorst

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© 2010 Jeffrey Walkenhorst
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