Broken Moats
Family-Office Long/Short Research, Variant Perception
Avis Budget Group's shorts are not wrong, and the concentrated hedge-fund longs look hard to monetize. Avis hasn't had a year of positive free cash flow in a decade, carries about $3.5B of net debt excluding cars, and faces obsolescence if self-driving cars cut the need to own or rent, while better-capitalized Uber is chasing the intermediary role. SRS effectively controls the board, so needed share issuance is unlikely, and selling its stake would collapse the price. x.com
Avis Budget is close to the worst business to own in this environment. It relies heavily on gasoline, carries high leverage and is very economically sensitive, and almost 20% of revenue comes from EMEA, exposed to gas-price surges and Middle East travel fears. The recent spike looks like squeeze tactics by a fund with a large long-held stake, coming after an at-the-market offering; borrow is hard to get. x.com x.com
Avis Budget is overvalued: a walk through the rental car area at Washington Dulles airport showed nothing in car rentals that justifies $400 a share, even with AI. x.com
Avis Budget's market cap looks absurd: on rough private valuations it is now worth more than Enterprise, U-Haul, Hertz, Turo, Budget, Alamo, Thrifty and Ace combined, basically the entire rent-a-car industry. Shorting at the $490s is late after the $700-$800s, so only a small short, but the stock is probably going to $400. x.com x.com
Avis Budget is undervalued even at a $15 billion market cap, when CoreWeave carries a $62 billion market cap on half the revenue. x.com
Avis Budget's 509% one-month surge is an institutional short squeeze that will most likely end as holders take record profits. SRS and Pentwater locked up over 100% of the supply, 54% of the stock was sold short, and Pentwater's large call block forced delivery of shares that didn't exist. The squeeze could technically go on only if institutions coordinated, which is illegal. x.com
Avis Budget Group looks like a great short on the way down because its roughly 500% rise over the past month appears to be just a short squeeze, with no fundamental reason or even buyout speculation behind it. x.com
Avis Budget is set up for the short squeeze of the year and can 10x from here. Two hedge funds own a combined 108%, holding 71% of the float plus more through derivatives, while 54% of the float is sold short. It will eventually fall 90%, but likely rises 2-5x first; trading it is risky, with put premiums ultra high. x.com x.com
Avis Budget Group looks set for a downdraft. Two funds hold 71% of the company and neither is flinching, since whichever one sells first would lose billions; that standoff looks like illegal collusion that legal discovery could eventually unearth. High volatility makes staying positioned for the decline attractive. x.com x.com
Avis Budget's sixfold rise in two weeks is madness for a company whose financials and KPIs are stagnant. x.com
Avis Budget has no underlying business value to support its price swings, so buying it is gambling, not investing. The stock fell about 38% in a day and kept plunging after a week of being promoted to retail investors, who rarely have the risk controls, position sizing or discipline to survive such swings. x.com
Uber's valuation is out of balance with its fundamental trajectory over the medium term, and the long-term thesis is less convincing than it once was. It became a cash-flow machine sooner than expected, but the past couple of years have been a grind. It is a hold now and a sell if it reaches the top of its technical channel around $100. x.com x.com
