HTZ Shorts Pay 85% to Hold Their Ground

Hertz Global Holdings enters its November 5 earnings date with the lending market effectively closed, borrow costs at a record, and 40% of the float still committed to a short position that is becoming more expensive to maintain by the day.

The most striking data point this week is not the size of the short position but the cost of keeping it. Borrow costs reached 85.45% APR on October 20, up 45% in a single session from 59.17% on Monday and more than tenfold the 8% to 9% range that prevailed in early October. Over the past month, the cost of new borrow has risen more than 1,300%. Availability has been at zero for weeks, meaning every share in the lending pool is lent out and no new supply has emerged. The borrow market is not tight. It is shut.

Yet the short position has barely moved. Short interest held at 124.7 million shares on October 20, equivalent to 40% of free float, down only fractionally from the 126.4 million shares recorded a week earlier. The ORTEX short score climbed to 80.2 on October 20, up from 75.4 at the start of the month and the highest reading in the recent series. What the data reveals is a two-tier lending market. Entrenched shorts carrying positions opened in September at 4% to 6% rates face very different economics from any new entrant paying 85%. That gap is why the position has not unwound: the incumbents are not irrational for holding, even as the door slams on anyone trying to join them. The disconnect between a stock up just 4% on the month and borrow costs up 1,300% over the same period is now the defining tension in this name.

Options positioning has turned incrementally less defensive than it was. The put/call ratio eased to 0.88 on October 20, below its 20-day average of 0.96 and roughly one standard deviation under it. That is a shift from the readings above 1.0 that persisted through most of late September and early October, when protective put demand was notably heavier. The move is modest but directional: options traders are hedging less aggressively into the print than they were a month ago, even as borrow costs scream the opposite message.

The Street has been uniformly cutting targets. Morgan Stanley's Adam Jonas trimmed his Equal-Weight target to $2.50 on October 15, the second reduction in five weeks following a move to $3.00 in September. Goldman Sachs and Barclays both carry Sell and Underweight ratings respectively, with targets at $2.00 and $1.00. No analyst among the recent movers has upgraded the stock or raised a target. The consensus mean target sits at $2.13, barely above the current price of $1.92. The valuation picture is equally uncomfortable: the EV/EBITDA multiple is running at nearly 40x on a company with a negative earnings yield and negative book value. Knighthead Capital, the activist holder behind CK Amarillo LP, filed a fresh Schedule 13D/A on October 21 and continues to hold a 50.9% stake, the controlling shareholder as last disclosed. Per the standard caveat, 13D/G positions are event-driven disclosures and may not reflect the current state of the register below the 5% threshold for other holders.

ORTEX flags that HTZ is an 87% probability candidate for deletion from the CRSP US Small index at the December 2026 Quarterly Review. The exit line sits at $2.46, meaning the stock would need to close above that level to avoid the cut. At the current price of $1.92, it is 28% below the deciding threshold. If the deletion proceeds, the rank date falls on December 4, with a trade date of December 22 and an effective date of December 23. ORTEX estimates index trackers would need to sell roughly $5 million of stock, equivalent to about 0.1 days of average volume, a modest mechanical flow in isolation but one that would add directional pressure in a name already carrying zero borrow availability.

With Q3 results due November 5, the question for the next two weeks is whether any catalyst, positive or negative, is large enough to shift positions that have become structurally difficult to move.