Bill Ackman’s Pershing Square Capital Management has accumulated nearly 20% stake in Hertz Global Holdings Inc., betting that the car rental company’s turnaround plans and its tariffs will increase the value of the vehicle.
The company began purchasing shares late last year and now “comprises 19.8% of the company’s shares, full share ownership and total return swap,” Ackman said in a post on X.
Ackman bets that Hertz can pass A Bad bet Tesla Inc.’s electric vehicles are taking advantage of the potential rise in used car prices due to President Donald Trump’s tariffs on US car imports. It also relies on Hertz CEO Gil West, managing the company’s large debt load and withdrawing ongoing turnaround efforts.
Hertz shares jumped 44% in New York trading on Thursday, extending the value of the stock more than doubled at the two-day rally.
In a regular Friday memo this week, West told Hertz employees that he was humbled and encouraged by Ackman’s support.
“This support is a testament to our progress and, importantly, the relentless effort that each and every one of you contributes every day,” West wrote in an email. “We should be proud of the progress we have made, but we also recognize that there is still important work.”
Trump’s 25% levy on imported cars is widely expected to raise the car price by thousands of dollars if it is in effect for a long time. This allows us to increase the value of second-hand cars, especially those in short supply, as consumers who are priced for previously owned vehicles.
“Hertz is uniquely positioned in the current customs environment,” Ackman said in X Post. “Hertz owns a fleet of over 500,000 vehicles worth around $12 billion. A 10% increase in used car prices amounts to $1.2 billion in profits from automotive assets, which amounts to about half the company’s current market capitalization.”
Ackman is looking at the route for Hertz to reach $30 per share by 2029. Before this week’s rally, Hertz stock traded for less than $5. What lies in achieving our West target is reaching revenue of $1,500 per unit, operating expenses of $30 per day, and depreciation per unit of about $300.
Pershing’s mathematics is also based on getting the fleet to Hertz at 85%, which the company rarely matches, historically at a level close to 80%.
Ackman is not the first Wall Street Titan to turn upside down from an investment in Hertz. Billionaire investor Carl Icahn thought he could cash out to a car rental company. Instead, Hertz went bankrupt and Ikan took it.$1.6 billionHeartbeat.
Soon, Ackman said he had low expectations for Hertz’s first and first half results.
So are analysts who cover the company. According to data compiled by Bloomberg, six-rate stocks are equivalent to holds, with four recommending selling stocks.
He also offered a bit of futurism to X investors and his followers. Ackman has brought Hertz’s ideas to the forefront of 11,200 global locations.
Khosrowshahi responded with an ApostIn X, Hertz is the “great partner” of his company,collaborationSince 2021, we have been offering perks for ride-share drivers who rent electric vehicles through Hertz. Khosrowshahi added, “I’m excited about brainstorming about how to expand the relationship.”
Ackman concluded his post with a warning.
“Investing is dangerous,” he wrote. “There is no guarantee of a successful outcome. Warning emptor.”
This story was originally featured on Fortune.com.
