Why billionaire investor Bill Ackman sees major upside in Hertz

Ackman is betting that rising used car prices from auto tariffs will lift the company’s fleet value and profitability. (3 min. read)

Author

Marcus Amick
April 21, 2025

Bill Ackman

Hertz $HTZ ( ▲ 44.31% ) has found a silver lining in the cloud looming over tariffs—one that could position the rental giant as a major player in the auto market as it emerges from bankruptcy.

The details: Last week, billionaire investor Bill Ackman announced on X that his company, Pershing Square Capital Management, had upped their ante in Hertz and shared how he sees the auto tariffs potentially benefiting the rental company.    

  • After accumulating shares last year, Pershing Square Capital Management now has a 19.8% stake in the company, consisting of outright share ownership and total return swaps.

  • Ackman adds that Hertz owns a fleet of 500,000 vehicles valued at roughly $12 billion and that a 10% increase in used car prices would equate to a $1.2 billion gain on its auto assets.

  • A $1.2 billion gain on Hertz’s auto assets is equivalent to about half of the rental company’s current market capitalization, says Ackman.

Worth noting: News of Ackman’s higher stake in the company prompted Hertz CEO Gil West to issue an internal message to the employees, expressing his enthusiasm about the investor’s confidence in the company. West clearly wasn’t the only one energized by Ackman’s post, as shares for Hertz surged 56% last week, closing Thursday at $8.24 per share.

What they’re saying: “Let me start by saying I am humbled, and we should all feel encouraged by Bill Ackman's comments and energized by the strong support shown by him, Pershing Square Capital Management, and others who share confidence in our strategy. This endorsement is a testament to our progress, and importantly, the relentless effort each of you contributes every day,” said West (via CNBC).

Between the lines: Ackman’s approach to Hertz and its fleet of 500,000 vehicles—with the auto tariffs in place—certainly makes sense, given some of the rental company’s other strategic moves at play. 

  • Though more widely known for its rental fleet, Hertz also sells used vehicles, with a web page designated as, “Used Cars for Sale Under $20K.” 

  • Ackman contends that efforts to rotate Hertz’s fleet, increase unit revenues, and reduce operating costs will significantly improve profit margins over the next several years.   

  • The investor’s comment on X about tariffs potentially leading to a 10% increase in used car prices could double as a promo for Hertz’s used car sales offerings.    

What they’re saying: “While the tariff announcements have created a near-term cloud over the travel industry—we have low expectations for Hertz’s Q1 and first half results—we believe that over the intermediate term, the company will generate sustainably higher profitability,” stated Ackman.

Bottom line: Ackman’s bet on Hertz could yield huge dividends, with wholesale used vehicle valuations in the first 15 days of April showing a 4.3% increase from the full month of April 2024.

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