Herc Holdings Surged 45% as Gabelli Fund's Top Q2 Contributor

Herc Holdings Inc. (NYSE:HRI) jumped approximately 45% in the second quarter of 2026, making it the largest contributor to the Gabelli Focused Growth and Income Fund, according to the fund's Q2 2026 investor letter released by Gabelli Investment Management.

The re-rating followed first-quarter results that far exceeded expectations. Equipment rental revenue rose 33% to $981 million. Adjusted EBITDA increased 33% to $448 million. Adjusted earnings of $0.21 per diluted share came in well ahead of consensus estimates.

Herc, an equipment rental company serving construction, industrial, and other commercial customers, accounted for 2.5% of the fund's net assets as of June 30, 2026. The stock closed at $143.34 on the NYSE at the time of the letter's reference point.

Guidance Affirmed on Mega-Project Demand

Management affirmed full-year 2026 guidance of $4.275–$4.4 billion in equipment rental revenue and $2.0–$2.1 billion in adjusted EBITDA. The company cited strong national account activity and a growing mega-project pipeline as support.

Herc pays a quarterly dividend of $0.70 per share, or $2.80 annualized.

Gabelli stated in the letter: "we believe continued synergy capture and mega-project demand support further upside from here."

The stock's recent momentum has been mixed. Herc had a one-month return of approximately -6.95% as of the letter's publication. Shares have traded between $88.45 and $188.35 over the last 52 weeks. On September 21, 2026, the stock closed at approximately $140.40 per share, with a market capitalization of about $4.69 billion.

A Weak Quarter Overall

The fund's largest winner could not offset broader headwinds. The Gabelli Focused Growth and Income Fund declined 1.61% in the second quarter of 2026, as pressure on telecommunications, income-producing securities, and rate-sensitive investments outweighed gains elsewhere in the portfolio.

The interest-rate environment deteriorated during the quarter. The Federal Reserve maintained rates at 3.50%–3.75% and adopted a more hawkish stance. Inflation accelerated from 3.8% in April to 4.2% in May.

The fund maintained a $0.08-per-share monthly distribution and carried a 6.53% SEC yield as of December 31, 2025.

Despite the challenging backdrop, the fund takes a constructive view on rates. It views the higher-for-longer rate environment as cyclical rather than structural. It believes elevated yields across its investments improve its forward income proposition.

The fund remains focused on companies with sustainable cash flows, pricing power, resilient business models, stable balance sheets, and the ability to compound value through economic cycles.

For investors tracking Herc, the question ahead is whether the mega-project pipeline and national account strength can sustain the earnings trajectory that drove the 45% quarter — or whether the stock's recent -6.95% one-month return signals a pause in the re-rating the market has already delivered.