By Dean Seal, Alexander Gladstone and Becky Yerak

Shares of Hertz surged after hedge-fund manager Bill Ackman's firm disclosed a significant stake in the rental-car company.

The Ackman-led Pershing Square Capital Management said in a securities filing on Wednesday that it has accrued 12.7 million shares of Hertz stock. That represents about 4.1% of the company's 307.9 million outstanding shares, according to FactSet.

The stock was up 17% at $4.28 in early Wednesday morning trading. Shares were trading at $6.57 this time a year ago and closed at a record low of $2.62 last September.

Hertz emerged as one of the first meme stocks after Covid-19 pushed it into bankruptcy in 2020, with individual investors betting that the company would rebound. Their faith was rewarded when Hertz staged a dramatic comeback and returned about $8 a share to stockholders in its exit from chapter 11.

However, Hertz shares have since steadily declined since it made a big bet on electric vehicles, which drove up its operating costs. The company has been working to unwind that investment, incurring depreciation costs along the way. Hertz has reported net losses for the last couple of years, while its debt load has increased.

The company also has been fighting a $272 million legal judgment stemming from a dispute with investors who owned its bonds at the time of its bankruptcy based on a claim that the company should have paid them interest while it was in chapter 11 since the shareholders ended up getting paid. Hertz is appealing the judgment to the Supreme Court.

"While the decline of the Covid-19 pandemic and the resumption of global travel rendered Hertz solvent despite the high stakes of this dispute, the nearly $272 million at issue here could make the difference between solvency and insolvency in many cases," Hertz lawyers wrote in an April 4 petition to the high court.

Write to Dean Seal at dean.seal@wsj.com, Alexander Gladstone at alexander.gladstone@wsj.com and Becky Yerak at becky.yerak@wsj.com

(END) Dow Jones Newswires

April 16, 2025 11:14 ET (15:14 GMT)

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