Avis Budget shares have jumped 342% since 20 March, to 444 dollars, while the S&P 500 is up just 10% over the same period. The trigger: Pentwater Capital Management disclosed an 8 million-share position on 20 March, giving it 22% of the 35 million shares outstanding — second-largest holder behind SRS Investment Management (~17 million shares, roughly 50% of the capital). Both funds hold additional cash-settled swaps that give them the right to acquire up to 13 million more shares; the free float outside those two holders is just 10 million.
This is where it gets explosive. More than 9 million shares have been sold short. If SRS and Pentwater exercise even part of their swap rights, short sellers will have almost nowhere to buy back the stock. The dealers who sold the swaps typically hold the underlying as a hedge and will not release them. SRS, which has more than 10% of the capital, cannot sell during the quiet period before end-April results. Pentwater is constrained by US insider-trading rules until September (the short-swing rule claws back profits on trades within six months).
Paper losses for the short sellers already reach 2.5 billion dollars, according to S3 Partners, and the cost of borrowing shares has exploded to more than 13 times its usual level. The historical comparison is Volkswagen 2008, when Porsche's hidden stake triggered a squeeze that briefly made VW the world's largest listed company. The only plausible relief valve would be Avis issuing new shares (up to 5 million authorised), but that would require board approval (where SRS holds two of six seats) and probably has to wait until after the earnings release. Source: Les Echos, 23 April 2026, Corentin Chappron.