Avis Budget Shorts Unwind as Lending Pool Stays Locked

Pentwater Capital dumped over $120 million of CAR stock in a single day. That's the story behind a dramatic unwinding in short interest — even as the lending market stays completely tapped out.

The Pentwater Unwind

On April 23, Pentwater Capital Management filed multiple sell transactions totalling more than $120 million in CAR shares. The trades ranged from $250 to $290 per share — well above Tuesday's close of $182. Pentwater remains the second-largest holder, with 22% of shares outstanding still on its books as of April 21.

The selling coincided with a collapse in short interest. SI fell 26% over the past week to 18.4% of free float, down from a peak above 27% earlier in April. In absolute terms, shorts shrank from roughly 9.4 million shares to 6.5 million.

Analysts Cut Ratings Into the Drop

Two major banks downgraded the stock on the same week the unwind accelerated. JP Morgan's Ryan Brinkman moved CAR to Underweight from Neutral on April 23. Barclays' Dan Levy did the same three days earlier, cutting to Underweight from Equal-Weight. Both analysts paradoxically raised price targets — Brinkman to $165, Levy to $150 — yet both targets sit well below the mid-April trading level of ~$290. The consensus is now a Hold, with a mean price target of just $120.

The stock has since fallen sharply. The one-week price change stands at -74.5%, a historic drawdown for any large-cap name.

The Lending Market Tells a Different Story

Despite the short-covering, availability has hit zero. Every share in CAR's lending pool is currently out on loan — a condition that has persisted for 12 consecutive trading days through April 28. This is also the 52-week extreme.

That matters. When availability is this tight, covering shorts becomes mechanically harder. New shorts cannot be opened without locating fresh borrow. The cost to borrow has eased from a recent peak of 8.4% on April 23 to 3.8% on April 28, suggesting some borrow supply did free up as the large holder trimmed — but not enough to restore meaningful availability.

Options Market Holds a Bearish Tilt

The put/call ratio stands at 1.93, elevated relative to the 20-day mean of 1.88. The ratio hit a 52-week high of 2.85 on April 23, the same day Pentwater was selling and analysts were downgrading. It has since pulled back but remains skewed toward puts.

An earnings event is scheduled for May 1. The last print, in February, produced a -21.8% single-day move.

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What to watch: Whether availability remains at zero through the May 1 earnings print — with SI still at 18.4% of float, any catalyst-driven move will be amplified by a fully locked lending market.