Avis Budget disclosed that a hedge-fund firm behind its recent stock volatility owes it money under a niche trading rule. The rental car company made the claim in a securities filing on Tuesday, citing a specific regulation tied to short positions.
The stock of Avis has experienced dramatic swings in recent days, driven by a short squeeze. A short squeeze occurs when heavily shorted stocks surge, forcing traders who bet against them to buy shares to cover losses.
Avis stated that the hedge fund, which it did not name, failed to deliver shares in a timely manner. The company said this triggered a provision allowing it to demand payment for the resulting market disruption.
The filing did not specify the amount owed but noted it could be significant. Avis said it is pursuing the claim under a rule that applies when borrowers fail to return borrowed shares.
The revelation adds a new layer to what has been an unusual trading episode. The stock’s recent rise has been reminiscent of meme-stock rallies, though Avis’s business fundamentals remain stable.
Investors have been closely watching the situation, as it highlights regulatory gaps in the short-selling market. The outcome could set a precedent for other companies facing similar trading anomalies.
Avis said it will continue to monitor the situation and take further action if needed. The company did not comment beyond the filing, and the hedge fund could not immediately be reached for comment.
