Bill Ackman’s Pershing Square Capital Management has amassed a nearly 20% stake in Hertz Global Holdings Inc. in a bet on the rental car company’s turnaround plan and that tariffs will boost the value of its vehicles.
The firm began buying shares late last year and now has “a 19.8% stake in the company comprised of outright share ownership and total return swaps,” Ackman said in a post on X.
Ackman is wagering that Hertz can get past a bad bet on Tesla Inc. electric vehicles and capitalize on a potential rise in used-car prices stemming from President Donald Trump’s tariff on US auto imports. It also relies on Hertz Chief Executive Office Gil West managing the company’s large debt load and pulling off an ongoing turnaround effort.
Hertz shares jumped 44% in New York trading on Thursday, extending a two-day rally in which the stock more than doubled in value.
West told Hertz employees in his regular Friday note this week that he’s humbled and encouraged by Ackman’s support.
“This endorsement is a testament to our progress, and importantly, the relentless effort each of you contributes every day,” West wrote in an email, according to a person close to the company. “We should be proud of the progress we’ve made but also recognize there is still significant work ahead.”
Trump’s 25% levy on imported automobiles is widely expected to raise car prices by thousands of dollars if it remains in effect for long. That could in turn drive up the value of used cars — especially late-model vehicles that are in short supply — as consumers who find themselves priced out the new-car market turn to previously owned vehicles.
“Hertz is uniquely well-positioned in the current tariff environment,” Ackman said in the X post. “Hertz owns a fleet of over 500,000 vehicles valued at approximately $12 billion. A 10% increase in used car prices would equate to a $1.2 billion gain on its auto assets – equivalent to approximately half of the company’s current market capitalization.”
Ackman sees a route for Hertz to get to $30 a share by 2029. Before this week’s rally, Hertz shares traded for less than $5. Getting there hinges on achieving West’s targets to reach $1,500 in revenue per unit, daily per-vehicle operating expenses in the low $30-range and depreciation per unit of about $300.
Pershing’s math also rests on Hertz getting its fleet utilization to 85%, a level the company has rarely matched and which has historically been closer to 80%.
Ackman isn’t the first Wall Street titan to envision upside from investing in Hertz. Billionaire investor Carl Icahn also thought he could cash in on the rental car company. Instead, Hertz went bankrupt and Icahn took a $1.6 billion beating.
In the near term, Ackman said, “we have low expectations for Hertz’s Q1 and first half results.”
So do analysts covering the company. Six rate the shares the equivalent of a hold and four recommend selling the stock, according to data compiled by Bloomberg.
He also offered a bit of futurism for investors and his followers on X. Ackman floated the idea of Hertz — with its 11,200 global locations — managing a fleet of self-driving vehicles for Uber Technologies Inc. He quipped that he would contact Uber CEO Dara Khosrowshahi.
Khosrowshahi responded in a post on X that Hertz has been a “great partner” of his company, referring to a collaboration since 2021 to offer perks to rideshare drivers who rent electric vehicles through Hertz. Khosrowshahi added he is “excited to brainstorm on how we can expand on our relationship.”
Ackman concluded his post with a warning.
“Investing is risky,” he wrote. “There are no guarantees of a successful outcome. Caveat emptor.”
