Why Avis Budget Lost a $70 Million Backer Even as Shares Rallied 34% in One Year

Toronto-based Maple Rock Capital Partners sold out its entire position in Avis Budget Group (NASDAQ:CAR), reducing its holdings by 415,584 shares in the third quarter in a move valued at $70.3 million, as disclosed on November 14.

What Happened

Maple Rock Capital Partners disclosed in a November 14 SEC filing that it fully exited its stake in Avis Budget Group (NASDAQ:CAR) during the quarter ended September 30. The firm sold all 415,584 shares it previously held, with the estimated value of the transaction at $70.3 million. The fund reported 41 total positions after the move.

What Else to Know

Top holdings after the filing:

• NASDAQ: WDC: $310.9 million (12.6% of AUM)
• NYSEMKT: EQX: $186.7 million (7.5% of AUM)
• NASDAQ: STX: $174.8 million (7.1% of AUM)
• NASDAQ: RUN: $128.6 million (5.2% of AUM)
• NYSE: TFII: $96.7 million (3.9% of AUM)

As of Tuesday's market close, shares of Avis Budget Group were priced at $133.93, up 34% over the past year and outperforming the S&P 500's 13% gain in the same period.

Company Overview

Company Snapshot

• Avis Budget Group offers car and truck rentals, car sharing, and ancillary mobility services through brands including Avis, Budget, and Zipcar; revenue is primarily generated from vehicle rentals and related services.
• The company operates a vast global network of locations, which it uses to monetize short-term vehicle access, optional insurance, and value-added services for both business and leisure travelers.
• It serves corporate clients, leisure travelers, and local consumers seeking flexible mobility solutions in North America and internationally.

Avis Budget Group, Inc. is a leading provider of vehicle rental and mobility solutions, operating a diverse portfolio of brands across over 10,000 locations worldwide. The company leverages its scale, technology, and brand differentiation to address the needs of both commercial and consumer markets. Its strategic focus on ancillary services and global reach supports its competitive position in the rental and leasing industry.

Foolish Take

Even as Avis posted solid operational momentum in the third quarter -- including revenue of $3.5 billion (up 1% from a year ago) and adjusted EBITDA of $559 million (up 11%) -- Maple Rock chose to reallocate capital elsewhere. That decision stands out because Avis is showing meaningful year-over-year improvement in fleet costs, a key swing factor in rental-car profitability. In the Americas business, adjusted EBITDA improved to $398 million, buoyed by lower per-unit fleet costs despite softer revenue per day. International profitability also strengthened, with adjusted EBITDA rising to $190 million on better pricing and cost efficiency.

For investors, the takeaway is that fundamentals and fund flows can diverge. Avis is generating strong cash earnings, but Maple Rock’s sale underscores how quickly sentiment can shift in an industry tied to travel demand, fleet availability, and used-car pricing cycles. Plus, the stock has had very volatile stretches, so selling amid the recent run-up might also provide the opportunity to re-allocate capital to higher conviction bets.

Glossary

Assets Under Management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Reportable Assets: The portion of a fund’s assets required to be disclosed in regulatory filings, typically U.S. equity holdings for 13F filings.
Position: The amount of a particular security or asset held by an investor or fund.
Sold Out Position: When a fund or investor sells all shares of a particular holding, reducing its ownership to zero.
Quarterly Average Prices: The average price of a security over a specific quarter, used to estimate transaction values.
Filing: An official document submitted to regulators, such as the SEC, disclosing financial or ownership information.
Ancillary Services: Additional services offered alongside core products, such as insurance or value-added features in vehicle rentals.
Leisure Travelers: Individuals renting vehicles primarily for personal or vacation purposes, not for business.
TTM: The 12-month period ending with the most recent quarterly report.
Competitive Position: A company’s standing or advantage relative to peers in its industry, based on factors like scale or brand.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends TFI International. The Motley Fool has a disclosure policy.