Al Root

Hertz stock soared after Bill Ackman's Pershing Square disclosed a stake.

Shares of the car rental company were up almost 22% at $4.44 in premarket trading. S&P 500 and Dow Jones Industrial Average futures were down 0.7% and 0.1%, respectivley.

Investors are excited that Pershing may see something they don't, or that it will make changes at the company to unlock value.

Pershing declined to comment on its 12.7 million share stake. That's roughly 4% of the stock outstanding.

The Wednesday disclosure was a surprise. According to the filing, Hertz stock was omitted from a filing for its fourth-quarter holdings on Feb. 14, "pursuant to a request for confidential treatment and for which such confidential treatment is no longer requested."

Coming into Wednesday trading, Hertz stock was flat year to date.

One thing benefiting the company is President Donald Trump's 25% sectoral tariffs on imported cars. Tariffs will push the average price of a car up in the range of $5,000, according to Wall Street estimates.

About half the new cars sold in the U.S. are imported, mainly from Mexico, Japan, South Korea, and Canada.

That also pushes up the price of used cars. Prices for new and used cars typically follow one another closely. That gives Hertz a gain on its existing inventory. While rental companies buy a lot of cars, they also sell a lot of them.

Of course, that benefit lasts only a while. Then investors have to consider the impact of rising costs on rental rates and demand.

Pershing could be thinking about asset values of used cars, or they could see other things that make Hertz attractive. Investors will have to wait to find out.

Write to Al Root at allen.root@dowjones.com

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April 16, 2025 09:17 ET (13:17 GMT)

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