Hertz wins over Ackman in a bet tariffs will increase the value of cars

(Bloomberg) – Bill Ackman’s Pershing Square Capital Management has a share of almost 20% in Hertz Global Holdings Inc. In a bet on the turnaround plan of the rental car business and rates will increase the value of its vehicles. The firm started buying shares late last year and now has a 19.8% stake in the company consisting of direct share ownership and total returns, “Ackman said in a post on X. Ackman is daring to get a bad bet on Tesla Inc. Electric Vehicles and the potential rise in President Donald’s users. It also relies on the Hertz CEO Gil West who runs the company’s major debt tax and collected a constant turnaround effort. Listen to the here is why podcast on Apple, Spotify or everywhere you listen. Hertz shares rose 44% on Thursday in New York trading, which expanded a two-day rally in which the share more than doubled. West told Hertz employees this week in his usual Friday that he was being humiliated and encouraged by Ackman’s support. “This approval is proof of our progress, and more importantly, the relentless effort that each contributes every day,” West wrote in ‘Ne post, according to a person close to the company. “We must be proud of the progress we have made, but also realize that there is still important work ahead.” Trump’s 25% levy on imported cars is expected to raise thousands of dollars if it stays in effect. This, in turn, can increase the value of used cars-especially late model vehicles that do not deficiency have non-as consumers who find themselves that the new car’s market is previously owned vehicles. “Hertz is uniquely well positioned in the current tariff environment,” Ackman said in the X-mail. “Hertz owns a fleet of more than 500,000 vehicles worth about $ 12 billion. A 10% increase in used car prices will equal a $ 1.2 billion profit on its car assets – equivalent to about half of the company’s current market cap.” Ackman sees a route for Hertz to reach $ 30 per share by 2029. Before this week’s rally, Hertz shares traded for less than $ 5. Getting there depends on the achievement of West’s targets to reach an income of $ 1,500 per unit, daily per vehicle operating costs in the low $ 30 range and depreciation per unit of about $ 300. Pershing’s math is also based on Hertz getting its naval utilization at 85%, a level that rarely matched the company. Ackman is not the first Wall Street Titan to invest in Hertz. Billionaire investor Carl Icahn also thought he could pay the rental car business. Instead, Hertz went bankrupt and Icahn took a $ 1.6 billion beat. In the near term, Ackman said: “We have low expectations for Hertz’s Q1 and first half results.” So do analysts who cover the business. Six the shares assess the equivalent of a hold and four recommend that the stock be sold, according to the data compiled by Bloomberg. He also offered a little futurism for investors and his followers on X. Ackman flew the idea of ​​Hertz-with his 11,200 global location to a fleet of self-managed vehicles for Uber Technologies Inc. Khosrowshahi replied in a post to X that Hertz was a ‘big partner’ of his business, referring to a collaboration since 2021 to offer benefits to Rideshare drivers who rent electric vehicles through Hertz. Khosrowshahi added that he is “excited to brainstorm how we can expand on our relationship.” Ackman concludes his post with a warning. “Investment is risky,” he wrote. ‘There are no guarantees for a successful outcome. Caveat emptor. ‘ -With help from Katherine Burton and Natalie Lung. More stories like these are available on Bloomberg.com © 2025 Bloomberg LP first published: 19 Apr 2025, 04:00 IST