By Alexander Gladstone and Peter Rudegeair
Billionaire hedge-fund manager Bill Ackman disclosed a nearly 20% stake in rental-car company Hertz on Thursday as he laid out his bullish reasoning behind the bet.
In a social-media post on X, Ackman said the current tariff environment helps Hertz, which he described as part of an oligopoly where Enterprise, Avis and Hertz control nearly 95% of the market.
Ackman said that an "improving industry structure and more rational competitive behavior" -- as well as the near resolution of a recent misstep when Hertz acquired a large fleet of electric vehicles -- were also driving his rationale behind the bet.
Auto tariffs are likely to cause used car prices to rise, and Hertz owns a fleet of over 500,000 vehicles valued at approximately $12 billion, Ackman tweeted. 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, who leads Pershing Square Capital Management, also cited an operational turnaround being led by Hertz's new management team as giving him confidence in the business, adding that he believes the leveraged capital structure will help generate an attractive return.
Hertz shares closed up 44.31% at $8.24 Thursday. Over the past two days, Hertz is up 125.75%.
Pershing Square's investment strategy involves holding a concentrated portfolio of well-known stocks that it believes are undervalued. Its largest positions include stakes in Universal Music Group, Chipotle Mexican Grill, Uber Technologies and Restaurant Brands International, the parent company of Burger King. Earlier in his career, Ackman made a name for himself in waging proxy fights and short selling, but Pershing Square has moved away from that in recent years.
His main fund, Pershing Square Holdings, has generated a compound annual return of about 12.7% since its inception in 2012, better than the S&P 500 over that span. It is down 5.5% this year through April 15.
Write to Alexander Gladstone at alexander.gladstone@wsj.com
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Pershing Square Holdings slightly underperformed the S&P 500 since its inception. "Billionaire Investor Bill Ackman Lays Out Thesis Behind Hertz Bet," published at 4:58 p.m. ET, incorrectly said the hedge fund did better than the S&P 500 over that span.
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April 17, 2025 17:40 ET (21:40 GMT)
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