- The rapid fall and then partial recovery in Avis Budget (CAR -1.6%) and Hertz Global (HTZ -1.4%) is tied to investors searching for an investment vehicle to place bets on used car prices, reasons Morgan Stanley's Adam Jonas.
- "For an investor who wants to express a negative view on used car values and/or the health of the auto ABS market, there is a dearth of instruments with which to express such a view," he writes.
- "The 2 US publicly traded car rental firms were seen as easy targets, particularly HTZ given its well-known operational issues, elevated debt levels, and debt maturity profile."
- After rallying sharply since their June lows, Avis is now down 9% YTD and Hertz is off 12% YTD.