(Bloomberg) – Bill Ackman’s Pershing Square Capital Management has accumulated Hertz Global Holdings Inc.
The company started buying stock late last year and now “the company owns 19.8% of the shares, which consists of share ownership and total return swaps,” Ackman said in an article on X.
Ackman is shaking, Hertz can overcome bad bets with electric cars on electric cars and take advantage of potential rises in President Donald Trump’s tariffs on U.S. automatic imports to rise in used car prices. It also relies on Gil West, the CEO’s office of Hertz, to manage the company’s huge debt burden and work hard.
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Hertz shares jumped 44% in New York trading on Thursday, extending a two-day rally, and the stock doubled its value.
West told Hertz’s staff in a regular Friday record this week that he was humbled and encouraged by Ackman’s support.
“This recognition is a testament to our progress, and it is important that each of you works tirelessly every day,” West wrote in an email. “We should be proud of the progress we have made, but also recognize that there is still important work.”
Trump’s levy on 25% of imported cars will generally raise the price of cars by thousands of dollars if it remains in effect for a long time. This, in turn, could increase the value of used cars, especially late-stage model cars in short supply – as consumers who find their new car market price turn to previously owned vehicles.
“Hertz is in a very good position in the current tariff environment,” Ackerman said in X Post. “Hertz has a fleet of more than 500,000 cars worth about $12 billion. Used cars have risen 10%, which is equivalent to a $1.2 billion increase in its auto assets, which is half the company’s current market capitalization.”
Ackman sees Hertz at $30 per share by 2029. Getting there depends on achieving West’s goal, reaching $1,500 per unit of revenue, $30 less per vehicle operating expense per year, and about $300 per unit of depreciation.
Pershing’s math also depends on Hertz’s increase in fleet utilization to 85%, a company rarely matches it and has historically approached 80%.
Ackman is not the first Wall Street Titan to invest from Hertz. Billionaire investor Carl Icahn also believes he can cash in on the car rental company. Instead, Hertz went bankrupt and Icahn made a $1.6 billion beating.
“We have low expectations for Hertz’s first quarter and first half results,” Ackman said in the short term.
The same is true for analysts covering companies. According to data compiled by Bloomberg, six shares are equivalent to shares held and are recommended to sell the shares.
He also offers some futurism to investors and his followers. X. Ackman proposed Hertz’s idea (with 11,200 global locations) to run a self-driving fleet of Uber Technologies Inc.
Khosrowshahi replied in an article on X that Hertz has been a “great partner” of his company, referring to a collaboration since 2021 that provides ride drivers with ride drivers who rent electric vehicles through Hertz. Khosrowshahi added that he was “excited about how we can expand our relationship.”
Ackerman ended his post with a warning.
“Investing is risky,” he wrote. “There is no guarantee of success. Warning is empty.”
– Assisted with Katherine Burton and Natalie’s lungs.
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