SPECIAL REPORT · FILED 04.21.2026 · 6 MIN READ

This should
be illegal.

A $25 billion debt-loaded rental car company just 4x'd in a month because the company's own Executive Chairman runs the hedge fund that owns half of it. Everything is disclosed. Everything is legal. Nobody is going to jail.

Closing Price · Mon

$608.80

↑ from $140 · 30 days ago

30-Day Move

+335%

+23.21% on Monday alone

Total Float Owned

107%

2 funds · incl. cash-settled swaps

2025 Net Loss

$889M

After $1.8B loss in 2024

§ 01 — THE PRICE

A near-vertical ramp from $140 to $608 in thirty days.

Every dip was bought aggressively. Each pullback — $170 to $145, $214 to $182, the low $300s back to $256 — vaporized into the next leg up.

$CAR · DAILY CLOSE · MAR 26 → APR 20

$608.80 ▲

MAR 26 APR 1 APR 7 APR 10 APR 14 APR 17 APR 20

§ 02 — THE IMPOSSIBLE MATH

Two funds own more than the entire company.

Avis has 35.32M shares outstanding. SRS and Pentwater control 71% of those shares directly. Add their cash-settled equity swaps and combined economic interest hits 107% — more stock than physically exists.

        Combined Economic Interest · % of Shares Outstanding
      

SRS · 49%

PENT · 22%

PASSIVE · 10%

+ SWAPS · 26%

107%

SRS Direct

17.4M

SHARES · 49%

Pentwater Direct

7.8M

SHARES · 22%

Cash-Settled Swaps

13.1M

EQUIVALENT · 36%

Short Interest

9.0M

SHARES · ~90% OF FLOAT

§ 03 — THE INSIDER

The Chairman and the fund manager are the same man.

The financial press is being polite about this. The Executive Chairman of Avis Budget Group is also the President of the hedge fund that owns 49% of Avis Budget Group. He has been at SRS since 2006 and on the Avis board since 2018.

PUBLIC COMPANY

Avis Budget
Group

NASDAQ: CAR
$19B Market Cap
$25.3B Total Debt
10,000+ locations · 180 countries

⇄

One Man Jagdeep Pahwa

HEDGE FUND

SRS Investment
Management

~$10–12B AUM
New York City
Founded 2006 by Karthik Sarma
Owns 49% of Avis Budget Group

Pahwa is Executive Chairman of Avis (since March 2025).
Pahwa is also President of SRS (since 2017).
SRS founder Karthik Sarma sits on the same Avis board.

§ 04 — THE TWO FUNDS

The architects of the corner.

49% OWNER

SRS Investment
Management

Founder · Karthik Sarma

AUM

~$10–12B

New York

Founded

2006

Strategy

Long/Short

Indian-born ex-Tiger Global Managing Director, ex-McKinsey, IIT Madras + Princeton. Sarma personally cleared $2 billion in 2021 from the previous Avis squeeze. Sits on the Avis board. SRS's largest position. Their entire bet.

22% OWNER

Pentwater Capital
Management

Founder · Matthew Halbower

REG. ASSETS

~$19B

Naples, FL

Founded

2007

Strategy

Event-Driven

Former Citadel + Deephaven Capital portfolio manager. Hunts setups exactly like this. Spotted the SRS concentration, spotted the float math, and built the trap in late March with a multi-stage options play that vaporized the available float overnight.

§ 05 — THE MECHANICS

How Pentwater built the trap.

A perfectly legal four-step sequence using standard market mechanics as a battering ram into a tight float.

STEP 01

Quietly accumulate while nobody is watching.

Pentwater bought millions of Avis shares directly while the stock traded under $100. No fanfare. No alerts. Just patient accumulation in a name with already-tight ownership.

STEP 02

Stack in-the-money calls as the dry powder.

Loaded a massive position in in-the-money call options. These would later be exercised to physically pull shares out of dealer inventory.

STEP 03

Sell a wall of in-the-money puts to force demand.

Sold a large block of in-the-money puts. Buyers of those puts had to delta-hedge by buying shares. Demand surged. Borrow rates ticked up.

STEP 04

Exercise the option block at expiry. The float disappears.

Around the late-March options expiration, Pentwater exercised a massive block of options, forcing physical share delivery into an already starved float. Borrow rates exploded. Shorts had nothing left to borrow. The squeeze became mathematically self-reinforcing.

§ 06 — THE FUNDAMENTALS

A business that should not exist at this price.

None of this rally is supported by what's happening inside the company. The fundamentals are a dumpster fire.

FY2025 Revenue

$11.7B

↓ 1.2% YoY

FY2025 Net Loss

−$889M

After $1.8B loss in 2024

Total Debt

$25.3B

Vehicle + corporate

Shareholder Equity

−$3.0B

Negative book value

EBIT Margin

−4.2%

Operating losses

Interest Coverage

0.7×

Cannot cover debt service

Current Ratio

0.72

Liabilities exceed assets

Q4 '25 Impairment

$518M

EV fleet write-down

RSI

Most overbought · Russell 1000

$19,000,000,000

Market Cap of a company that lost $2.7B over two years

§ 07 — THE HOSTAGE SITUATION

~$15 billion in paper gains they cannot touch.

Section 16(b) — the short-swing profit rule — claws back any profit on a buy/sell pair within 6 months for insiders and 10%+ holders. The funds are sitting on a winning lottery ticket they are legally barred from cashing.

~6 MONTHS LOCKED

SRS / Pahwa

Insider blackout through Q1 earnings · cannot sell

Pentwater

Locked until ~September under Section 16(b)

Combined Paper Gains

~$15B+ · untouchable

§ 08 — HE HAS DONE THIS BEFORE

Same fund. Same stock. Same playbook.

The 2021 Avis squeeze made Sarma $2 billion personally and put him on the global Rich List. Five years later, he ran the play again on the same ticker. The SEC had every chance to close the loophole. They didn't.

2021

Round One · November

Single-Day Move +108% to $332

Intraday High $500

Sarma's Personal Take $2 Billion

Setup Float corner

SEC Action None

"One of eight hedge fund managers globally to clear $1B+ that year."

2026

Round Two · April

Single-Day Move +23% to $608.80

Intraday High $612.58

Combined Paper Gains ~$15 Billion+

Setup Same playbook + swaps

SEC Action Pending? · TBD · Probably none

"The SEC has had five years to close the cash-settled swap loophole."

§ 09 — WHY NONE OF THIS IS ILLEGAL

Four loopholes. Zero violations.

Every retail trader watching this asks the same question. The answer is uglier than the question.

The cash-settled swap loophole.

Cash-settled total return swaps historically did not count as "beneficial ownership" — the bank technically owns the shares, the fund just owns the economic exposure. Post-Archegos in 2022, the SEC tightened disclosure requirements but never closed the underlying gap. You can have economic exposure to 10M shares without "owning" them on the books.

Everything was disclosed.

SRS has filed 13Ds on Avis for 15+ years. Pentwater filed when they crossed 5%. Both funds disclosed independently with no formal "group" filing. No coordination on paper. If they happened to land on the same trade, that's convergence — not conspiracy.

Options mechanics are options mechanics.

Pentwater didn't break a single rule. Selling in-the-money puts and exercising calls is just options 101. They used standard market mechanics as a battering ram into a tight float. Aggressive. Not illegal.

Manipulation requires intent to deceive.

Buying shares openly through disclosed filings doesn't qualify. Cornering got outlawed in commodities (RIP Hunt brothers). In equities? Gray zone. If you accumulate legitimately and price moves, the SEC has nothing to grab.

The Executive Chairman of Avis runs the hedge fund that owns half of Avis. His fund just made him billions on paper. He cannot sell for six months.

Five years ago he did the exact same thing. Made $2B. The SEC watched it happen and did nothing.

Now he's done it again. The SEC will watch it happen and do nothing.

This is the system.

This should be illegal.