Hertz, the US car rental company, has seen its shares surge by over 44% following a revelation that Bill Ackman, a prominent investor, has taken a nearly 20% stake in the business.
Ackman, the founder of Pershing Square Capital Management, has expressed his confidence in Hertz’s ability to thrive in a challenging market. He argues that the company’s fleet of 500,000 vehicles is uniquely positioned to benefit from the current tariffs on imported cars.
- The 25% levies on imported cars are driving up used car prices, making Hertz’s fleet more valuable by the day.
- With a 10% increase in used car values, the company’s fleet value would rise by $1.2 billion, which is nearly half of Hertz’s current market cap.
- Ackman believes that Hertz is well-positioned to take advantage of the situation, as it is the only major car rental company with a significant portion of its fleet comprising used vehicles.
Hertz has had a tumultuous history in recent years, including a bankruptcy filing in 2020 and a failed experiment with electric vehicles. However, the company is now poised to benefit from the current tariff environment, thanks to Ackman’s support and strategic planning.
| Key Points | Hertz’s Current Situation |
|---|---|
| Billion-dollar stake in Hertz | Pershing Square Capital Management founder Bill Ackman owns nearly 20% of the company’s shares. |
| Value of Hertz’s fleet | Approximately $1.2 billion, comprising 500,000 vehicles. |
| Car rental market share | Around 95% of the market, with Hertz, Enterprise, and Avis controlling the majority. |
Ackman’s bullish prediction is based on his confidence in Hertz’s ability to thrive in a challenging market. He believes that the company’s fleet of 500,000 vehicles is uniquely positioned to benefit from the current tariffs on imported cars.
“Hertz is uniquely well-positioned in the current tariff environment,” Ackman wrote. “As 25 percent levies on imported cars drive up used car prices, the value of Hertz’s fleet—around 500,000 vehicles worth roughly $1.2 billion—will rise in tandem.”
Ackman’s stake in Hertz has sparked significant interest in the company’s stock, with shares surging over 44% following the news. This suggests that investors are placing their bets on Hertz’s ability to thrive in the current market conditions.
With the company’s new CEO, Gil West, in place since early 2024, Ackman’s support is seen as an endorsement of the company’s turnaround efforts. West is focused on “rotating Hertz’s fleet, increasing unit revenues, and reducing operating costs” to “significantly improve profit margins over the next several years,” according to Ackman.
Ackman also highlighted Hertz’s advantageous position in the car rental market, citing the company’s control of around 95% of the market. He pointed to Enterprise’s estimated 20 percent profit margin as evidence “that the car rental business can be very profitable.”
Another possibility that Ackman floated is a partnership between Hertz and Uber, with the two companies potentially teaming up on an autonomous vehicle fleet roll-out. Ackman believes that Hertz’s large fleet and global presence make it an ideal partner for Uber.
With its strong fundamentals and strategic position, Hertz is well-positioned to benefit from the current market conditions.