Billionaire Karthik Sarma Scores Big As Avis Stock Surges 160% |
The Avis trade has more lives than a rental car with 200,000 hard miles on the odometer.
Avis Budget Group stock has surged more than 160% in the past month, delivering a windfall to billionaire Karthik Sarma. The New York-based founder of SRS Investment Management, whose personal fortune Forbes last estimated at $2.9 billion, oversees roughly $13.9 billion in assets. Avis, which generated $11.7 billion in revenue last year but posted a $995 million net loss, is his biggest bet.
At current prices, SRS’s stake in Avis is worth approximately $3.7 billion. That is more than double the roughly $1.7 billion valuation at the end of February, before the latest rally began.
This isn’t unfamiliar territory. In 2021, Avis surged 456% during another short squeeze, briefly making Sarma billions on paper (Bloomberg reported he personally made $2 billion that year from his fund) before the stock gave back much of those gains. Yet Sarma has never wavered. He has served on Avis’s board since 2020, and his firm now owns nearly half the company’s shares. The Avis position represents about one-third of SRS’s publicly disclosed equity portfolio. That figure excludes derivatives, private holdings or shorts.
The latest rally has been driven by both real-world demand and Wall Street mechanics. Record TSA lines and flight delays stemming from staffing shortages during a partial government shutdown under the Trump administration have frustrated air travelers and prompted many to consider road trips instead. This has boosted expectations for strong car rental demand this spring and summer. At the same time, heavy short interest, roughly 23% of the float, set the stage for a squeeze. As the stock climbed, short sellers scrambled to cover their positions, fueling even sharper gains.
Sarma’s commitment dates back more than 15 years. SRS first disclosed a stake in Avis in 2010, starting with about 5% of the company. He has kept buying through recessions, the pandemic and multiple sharp swings in the share price.
Before launching SRS in 2006, Sarma worked at Tiger Global, the hedge fund founded by billionaire Chase Coleman. Tiger is known for making big, concentrated bets on a relatively small number of companies, especially in tech. When those bets worked, the returns were huge. When tech stocks collapsed in 2022, Tiger lost more than half its value and became one of Wall Street’s biggest blowups. Most investors spread their money around so one or two bad bets doesn't hurt too much. Sarma did the opposite with Avis. He kept making the same bet, again and again, for more than 15 years.
SRS declined to comment.
Rallies like this rarely last for long. Sarma could use this moment to trim or exit a position that has taken up so much of his fund for so long. Or he could do what he has done for the last 16 years: keep holding, betting the battered rental giant still has more room to run.