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CAR Low-Float Re-Ramp Thesis
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Edit: Added the pictures back in since they were lost in previous edits. Words would mean nothing without my actual performance backing them up.
Also, there is no TL;DR version. That's how regards get promoted to bagholders, jumping in without fully understanding the play or having an exit plan.
Disclaimer: Not financial advice, I just like the company/stock and the opportunity to make more money. This post does not discuss a short squeeze, just basic supply and demand.
Whether you joined the last rally or not, I'll be in for the next $CAR rally.
Brief intro about me. I know this is unusual for a DD post, especially on reddit where doxing is a real concern, but I want people to understand who I am and my background, not just see another random regard posting DD.
I am a former security (R&D) dev who left the rat race in Feb to start my own hedge fund, along with a separate investment fund for friends and family. The riskier plays are done strictly in my own fund.
For context, I played the last one by shorting with spreads at the top, then picking up 4,200 shares in the low $200s, and hedging ER with puts and covered calls since it was definitely wild. You can see the profits from the short play at the very last peak, followed by about a ~20% drawdown.
The play definitely affected my performance in the short term, but you can see I've only been in BIG plays, ranging from shorting scam companies like $DJT, quantum (scam) companies, and Trump circle stocks, to going long on undervalued companies like $INTC, $G, $EIX, $PCG, and $HPE. I pick a side, time it well, and build my position around that.
I think that is enough to establish that I am a regard who has something loose in his head and is addicted to adrenaline. I also opened my post history for everyone to dig around. Here comes the actual DD.
I. Management not selling shares
Management has not been selling shares, especially at this price level, because it is currently below what they believe it should be.
From the Earnings Call transcript: https://ir.avisbudgetgroup.com/static-files/33eb82e8-bdc5-4390-9711-24faf5d52a4a
We believe that this significant increase in ownership, combined with the high short interest in our name resulted in a short squeeze. That much is well understood. Here's what we're absorbing just now. After market closed yesterday, Pentwater disclosed the sale of 4.3 million shares for gross proceeds of $1.75 billion on April 22 and April 23. Given the quantum of shares sold in such a short span of time, our stock price experienced a significant decline.
It is important to note that Avis has not bought or sold a share since 2024. Our largest shareholder, SRS, has not bought or sold a share since 2023. So it seems the only insider active during this period of excess volatility was Pentwater Capital. Pentwater has acknowledged that its sale of Avis stock, at least in part, was violative of the SEC Section 16 short swing profit rules. Avis has requested Pentwater furnish it all relevant information concerning the trades and Avis will aggressively pursue all rights on behalf of our stockholders.
I can tell you this much. We have no intention of issuing shares anywhere near these levels. And more broadly speaking, Listen, I bought my first shares in Avis in 2010. So I've been involved with this company for 16 years now. Back then, and you've covered us for a while, but you know that the Avis had 129 million fully diluted shares outstanding.
And since then, in my capacity as a large shareholder, a Board member, a CFO, I've been very consistent in my belief that our shares are undervalued and have advocated for buying back stock. So our shares outstanding today are 35 million shares.
So we've retired 94 million or 73% of those original shares outstanding. I've not seen public companies reduce their share count by anything close to that order of magnitude. So we are true believers of this business. And on a fundamental basis, we were repurchasing our shares as high as $300 post-pandemic. So the thought of doing the opposite and issuing shares never entered my mind until this situation arose.
Now you're right, we put an ATM in place because it'd be irresponsible not to. We've done this in the past as well, and we haven't issued any shares. So I'm not here to trade Avis for value extraction. We're going to put in the hard work and create value by building a better business. It might not be as flashy as making a quick buck, but that's the journey we're on, and we take pride in that.
II. Pentwater situation
Even though management stated they would go after Pentwater for $1.75B in profits (see the transcript), since Pentwater was an insider and subject to the Section 16(b) short swing profit rule, I did some further digging and suspected that they only sold the ~10% they held BEFORE becoming a 10% holder.
Meaning, if those shares were held long enough, they could sell them without forfeiting the profits to Avis Budget Group, and that is exactly what they did.
What happened:
- Pentwater already sold all the shares they held prior to becoming a 10% insider (and held for longer than 6 months), meaning they planned this for a while. They are currently around 11-12%.
- They cannot sell the newly bought shares (in March - April) and keep the profits until around Sep - Oct. Otherwise, all gains would fall under Section 16(b), meaning the profits would be returned to Avis.
- Again, they already sold ALL shares that were held longer than 6 months, and even sold ~100k extra (dipping into the newly bought shares). The profits from those ~100k shares will go to Avis. Both sides' lawyers are likely already discussing this.
My estimate is about $30M of free money going to Avis from those extra 100k shares, assuming the profit was $300 - $400 per share on average.
Sources:
See the footnotes of the two Form 4 filings, where Pentwater acknowledges that some of the sales are subject to the Section 16(b) short swing profit rule:
- https://www.sec.gov/Archives/edgar/data/1425851/000090266426002181/xslF345X06/ownership.xml
- https://www.sec.gov/Archives/edgar/data/1425851/000090266426002182/xslF345X06/ownership.xml
That means they RAN OUT of shares that can be sold without giving back all the profits to AVIS.
III. Float + pressure mechanics
The pressure Pentwater released was about ~3M shares, roughly 10% of the float.
They made BILLIONS selling at the top. Again, they brought 3M shares IN and 3M shares OUT, tripling the profit. That means EVERYONE can theoretically do the same. I am not discussing a short squeeze here, since it is prohibited in this sub, but my regarded math is definitely mathing that the price could go up when supply is scarce, which is common sense.
3M shares =
- 3,000 people holding 1,000 shares each, or
- 30,000 people holding 100 shares each
Just an example to show how thin the float is.
Also, if this is profitable, what prevents Pentwater from doing a second round, buying again to release their 12% once they have held it long enough? That would be around the Sep - Oct time frame. In the meantime, it is MY turn to play.
Last but not least, management has earned my respect, just read the ER transcript to understand why for yourself. And the strong season for car rentals, with the World Cup happening in the U.S., Avis's largest market, this summer.
The OP presents a bullish volatility thesis on Avis Budget Group (CAR) that is more about trading structure than traditional fundamentals: he argues that the prior CAR spike and crash was mainly caused by Pentwater buying, driving the stock up, and then selling in size in an extremely low-float and high-short-interest environment. Now that Pentwater has sold a large amount of its freely disposable older position, its remaining newer holdings could trigger Section 16(b) short-swing profit disgorgement if sold within 6 months, so selling pressure may be relatively constrained over the next several months, and the low float could again allow the stock to move sharply higher on incremental buying. The OP cites management’s description on the Avis Q1 2026 earnings call of Pentwater selling 4.3 million shares for total proceeds of about $1.75 billion, as well as the CEO’s statement that the company “would not issue shares anywhere near these prices,” the historical reduction in diluted shares from 129 million to about 35 million, and the long-term repurchase of 73% of shares outstanding, as evidence that management is unwilling to dilute and believes the stock is undervalued. He further reads Pentwater’s Form 4 footnotes and infers that most of the shares Pentwater sold had been held for more than 6 months before it became a 10% insider, so profits did not need to be disgorged; however, about 94,000 to 100,000 shares were matchable short-swing trades, and the profit may need to be returned to Avis, which he estimates at about $30 million. In the images, the OP shows his account holding 4,214 shares of CAR, with a screenshot price around $185.55 and market value around $782,000, along with GME and a small amount of OXY; there are also screenshots showing total account value of about $1.194 million, a two-year change of about +3478.8%, and a year-to-date return through April 30, 2026 of about 406.45%, intended to support his claim that he has participated in multiple high-volatility trades and has real trading performance, though the authenticity of these screenshots cannot be independently verified. The OP does not provide a clear price target and stresses that this is not simply a call for a short squeeze, but rather a “supply-demand + low-float + high-volatility” trade; catalysts include the stock becoming easier for capital to move after trading volume dries up, option pinning fading, the summer car-rental season, and the 2026 World Cup being held in North America potentially boosting travel demand. His implicit assumptions are that the publicly tradable float is indeed extremely low, Pentwater is unable or unwilling to sell again in the short term, there will be no ATM offering or selling by other large shareholders, and there will be a sufficiently large “third-party player” or well-capitalized retail crowd to absorb supply and push the stock higher. The biggest weakness is that the core thesis relies heavily on market microstructure rather than earnings improvement; CAR’s fundamental risks, including leverage, fleet residual values, credit ratings, and the lack of a moat in the car-rental industry, are not sufficiently quantified; management’s statement that it is “not issuing for now” does not mean it will not use an ATM in the future; and the comments have already pointed out small insider sales by certain executives after the post, which weakens the broad claim that “management not selling shares.”
The comment section is clearly divided overall and has a typical WSB sarcastic tone. Supporters mainly accept the OP’s mechanical logic regarding Pentwater, Section 16(b), low float, and high short interest, arguing that if roughly 3 million shares of buying and selling pressure could cause the prior huge move, then with Pentwater’s remaining position constrained in the short term and trading volume drying up, the stock could indeed be moved again by a relatively small amount of capital. Some users condensed the OP’s long post into a TLDR of “CAR, direction up, summer car-rental season, Pentwater cannot freely dump.” Critics focus on three points: first, CAR is a traditional car-rental business with little innovation or moat, and its leverage, ROIC, credit rating, and fleet residual-value risks mean it should not receive a high valuation; second, the OP is essentially betting on a technical squeeze or low-float, manipulation-like volatility, which requires new buyers to come in, because “low supply” alone cannot push the stock higher; third, the OP may already be a bagholder, with highly upvoted comments saying his long post looks like a “car crash” or a “bagholder’s last breath,” while another user said they sold 1,000 shares at $180 and lost $90,000, reinforcing the high-risk impression of the trade. [OP] repeatedly responds that he is still holding, is down about 30%, and plans to manage the position over several months through covered calls and staged exits; he refuses to give a price target, arguing that publishing a target would let others hedge or trade against it, and emphasizes that volume first needs to dry up and option positioning needs to fade before the low float makes the stock easier to push up or down. In response to fundamental criticism, [OP] acknowledges that the core is not fundamentals, but rather that “the company is only okay, while the low public float and high short interest are the key points”; he says he has reviewed 5 years of financial statements, believes earnings volatility is heavily influenced by used-car prices, and argues that debt is part of the car-rental industry’s structure and has declined year over year. In response to risk-management criticism, [OP] says he previously had tighter hedges around earnings by selling $500 calls and buying $150 puts, but that his current two-week stance is more directional, and only later does he plan to sell slightly out-of-the-money monthly covered calls, exit about 7%-10% of the position by month, and sell puts. The most substantive highly upvoted rebuttal questions “management not selling”: a user posts insider-sale news involving Ravi Simhambhatla and others, and points out that the company previously filed a 5 million-share ATM around $130, yet then said at $180-200 that it would not sell, arguing that management’s statements are opportunistic. Overall, the comment section does not form a positive consensus on CAR’s fundamentals; many users view it as a high-risk low-float volatility trade, with supporters accepting the structural opportunity and critics seeing it as a repackaged squeeze/bagholder narrative.
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