Pershing accelerates Hertz holding on tariff and turnaround hopes

Manager Bill Ackman has increased Pershing Square's stake in Hertz to 20%, as he believes the car rental group will benefit from US tariffs driving up the value of its car fleet.

Billionaire investor and manager of Pershing Square (PSH ) Bill Ackman has ramped up his holding in Hertz, swiftly building a 20% stake in the car rental giant.

Filings to the US Securities and Exchange Commission (SEC) show Pershing Square Capital Management, the Ackman-run US investment company which manages UK-listed Pershing Square, bought 12.7m Hertz shares valued at $46.5m (£34.9m).

This makes Pershing Square the second largest investor in the company with a stake of 19.8%, including direct share holdings and swaps. Ackman has been busy buying shares in the troubled group since the start of the year. At the end of 2024, Pershing’s stake was only 4%. 

Shares in Hertz rocketed 56% on the announcement of the near-20% stake, a record one-day gain, although the stock has given back some of the gains through investor profit-taking.

Hertz has had a particularly difficult period, emerging from bankruptcy in 2021 and suffering a more recent misstep into electrical vehicles, which saw investors put off by its pivot to Tesla cars due to concerns about charging and maintenance.

However, Ackman believes improving industry structure and ‘more rational competitive behaviour’; the resolution of its over-exposure to Teslas; a successful operational turnaround plan; and a ‘leveraged capital structure’ will enable Hertz shareholders to generate a highly attractive return on investment.

In addition, the controversial tariff plans brought in by US president Donald Trump – which Ackman has called for a pause on despite being a Trump supporter – should actually benefit Hertz by pushing up the value of its fleet.

‘Hertz is uniquely well-positioned in the current tariff environment, where auto tariffs are likely to cause used car prices to rise,’ he said.

‘Hertz owns a fleet of over 500,000 vehicles valued at approximately $12bn. A 10% increase in used car prices would equate to a $1.2bn gain on its auto assets – equivalent to approximately half of the company’s current market capitalisation.’

Shares in Pershing Square were little moved on the news of the position, with shares in the Guernsey-listed portfolio of North American stocks continuing to trade at a stubborn 34% discount.

This reflects the huge gap between the £10.9bn net asset value (NAV) of the fund and the £6.1bn market cap.

Over the 12 months to yesterday, Pershing Square’s shares fell 9.4% versus a 10.3% fall by the average trust in the AIC’s North America sector.

Over three years to yesterday, the fund’s shares have gained 22.2% versus 17.3% by the sector average.