Hertz surges after Bill Ackman takes big stake in rental car firm

Bill Ackman’s investment firm, Pershing Square, made a strategic move by taking a significant stake in Hertz, the rental car company that emerged from bankruptcy four years ago. This bold move caused Hertz’s shares to skyrocket by 56% after it was revealed that Pershing Square had built a 4.1% position in the company by the end of 2024. Subsequently, Pershing Square increased its stake to 19.8% through shares and swaps, making it the second-largest shareholder in Hertz.

The investment firm received an exemption from the U.S. Securities and Exchange Commission to delay filing its position until Wednesday, allowing it to accumulate a substantial number of shares. This move indicates Ackman’s confidence in Hertz’s potential for growth and profitability in the future.

Hertz has faced significant challenges over the past decade, including bankruptcy during the Covid-19 pandemic in 2020. Despite emerging from Chapter 11 bankruptcy protection in 2021, the company encountered financial difficulties due to its heavy investment in all-electric vehicles, particularly Teslas. This decision led to substantial losses for the company, as the residual values of these vehicles declined significantly.

During its 2024 fourth-quarter earnings report in February, Hertz disclosed a $2.9 billion loss for the year, which included a $245 million loss from the sale of electric vehicles in the fourth quarter. Despite these setbacks, Ackman’s investment in the company demonstrates a vote of confidence in Hertz’s ability to overcome its challenges and thrive in the competitive rental car industry.

Overall, Ackman’s strategic investment in Hertz signals a positive outlook for the company’s future, as it navigates through its financial struggles and works towards sustainable growth and profitability. This move has the potential to drive Hertz towards a path of recovery and success in the long term.