Billionaire investor Bill Ackman’s Pershing Square Capital Management has acquired a significant stake in Hertz Global Holdings Inc. (HTZ), one of the world’s largest car rental companies. The investment, disclosed through regulatory filings on Wednesday, April 16, 2025, has already sparked a sharp rally in Hertz’s stock, with shares surging more than 20% in premarket trading.

Pershing Square Capital Management revealed that it now owns approximately 4.1% of Hertz, having purchased 12.7 million shares valued at around $46.5 million at the time of acquisition. This positions Ackman’s firm as one of Hertz’s largest shareholders, a notable development given the company’s recent struggles. The stake was reported through an amended 13F filing, signaling strong confidence from a hedge fund renowned for its activist approach to driving shareholder value.

Market Reaction

The announcement triggered an immediate and substantial response from the market. Hertz shares jumped 21.9% to $4.45 in premarket trading, reflecting investor optimism about the potential impact of Ackman’s involvement. Even Avis, a competitor in the car rental industry, saw a 5% uptick in premarket trading, suggesting a broader positive sentiment in the sector. The surge comes despite Hertz’s stock having lost more than 80% of its value over the past five years, a period marked by significant operational and financial challenges.

Hertz’s Troubled History

Hertz has faced a tumultuous few years, emerging from bankruptcy in 2021 after grappling with the fallout from the COVID-19 pandemic, which decimated the travel industry. Since then, the company has struggled with high debt levels and operational inefficiencies, which have weighed on its profitability and stock performance. Despite these challenges, Hertz remains a dominant player in the global car rental market, serving millions of customers annually. The company continues to face debt and operational problems that affect its business model and path to profitability.

Why Ackman? Why Now?

Bill Ackman, known for his activist investing style, is no stranger to taking bold positions in companies he believes are undervalued or have untapped potential. His investment in Hertz aligns with his long-standing philosophy of identifying high-quality businesses that the market has overlooked. While Ackman has not publicly commented on his rationale for the investment, industry analysts speculate that he may see Hertz as a turnaround opportunity, particularly as the travel sector continues to recover post-pandemic.

Ackman’s investment philosophy, often compared to that of Warren Buffett, focuses on value investing—seeking out companies with strong fundamentals that are trading below their intrinsic value. Hertz, with its significant market presence but battered stock price, fits this profile. Additionally, recent developments in the auto sector may have played a role. Earlier this year, President Trump announced tariffs on the auto industry, which initially raised concerns about higher car prices and their potential impact on rental companies like Hertz. However, Trump later moderated his stance, suggesting relief for automakers, which could ease pressure on the rental car market. Ackman’s timing suggests he may have factored these macroeconomic shifts into his decision.

Broader Implications

Ackman’s investment is not just a financial move; it could also signal a strategic shift for Hertz. As an activist investor, Ackman is known for pushing for operational improvements and governance changes in the companies he invests. His involvement may lead to renewed focus on addressing Hertz’s debt burden and operational challenges, potentially unlocking value for shareholders. The market’s enthusiastic response to the news underscores the influence of high-profile investors like Ackman. His track record of turning around struggling companies, such as his successful bets on Canadian Pacific Railway and Chipotle Mexican Grill, lends credibility to his latest move. However, it’s worth noting that not all of Ackman’s investments have been winners—his high-profile short bet against Herbalife, for example, ended in significant losses.

The investment also has implications for the broader car rental industry. The positive movement in Avis’s stock price suggests that Ackman’s stake in Hertz could boost confidence in the sector as a whole, particularly as travel demand continues to stabilize (Sherwood News). However, Hertz’s challenges are far from over, and Ackman’s ability to effect meaningful change will be closely scrutinized.

Analyst Perspectives

Analysts have mixed views on Hertz’s prospects. According to data from LSEG, six out of ten brokerages currently rate Hertz stock as a “hold,” while four rate it as “sell.” The median price target for the stock is $3, suggesting that even with Ackman’s involvement, the road to recovery may be long. However, the immediate market reaction indicates that investors are betting on Ackman’s ability to drive positive change.

Looking Ahead

Hertz is scheduled to report its first-quarter earnings on May 12, 2025. This will be a critical moment for the company, as investors will be looking for signs of progress on its path to profitability. Ackman’s stake could provide Hertz with the impetus to accelerate its turnaround efforts, but the company still faces significant hurdles, including managing its debt load and navigating a competitive rental car market. The upcoming earnings report will likely provide further insight into Hertz’s financial health and strategic direction, as well as the potential impact of Ackman’s involvement.

Conclusion

Bill Ackman’s decision to take a 4.1% stake in Hertz represents a bold bet on a company that has been battered by years of challenges. While the immediate market reaction has been overwhelmingly positive, with Hertz shares soaring over 20%, the true test will come in the months ahead as Hertz works to stabilize its operations and capitalize on any improvements in the broader economic environment. Ackman’s track record as an activist investor suggests he could play a pivotal role in shaping Hertz’s future, but the company’s deep-rooted challenges mean that success is far from guaranteed. For now, Ackman’s involvement has injected a dose of optimism into a company that desperately needs it, and investors will be watching closely to see if he can deliver on the promise of a turnaround.