This was pretty brilliant. And amazingly enough, it was done completely in full view, so we can review.
Briefly, here is what happened.
On February 18, 2026, Avis announced earnings and the stock dropped falling from $124 to $92.
A hedge fund added shares and then took out a synthetic long position via total return swaps on February 20. The document was filed on February 24.
The use of TRS allows them to control shares without being custodians of those shares circumventing additional filing requirements. (The Tiger Cubs use this strategy to hide what they are doing. Google Archegos Capital if you want to see what weapons of financial destruction TRS can be.)
At the same the fund wrote Put contracts that expired March 20, 2026. As the stock moved they exercised those Put contracts and also took out September 18 2026 $80 and $85 Call contracts. This increased their share position and forced the counter party to buy stock to hedge the Calls. Essentially, they were providing a floor while other parties continued to short.
On March 20, they exercised all outstanding in-the-money Puts taking over those positions causing a volume spike the following day.
The key to this squeeze is the 12M synthetic long position held via TRS. The counter party to those trades essentially guaranteed the float would be negative and stay negative.
I will leave it to you to go through the filings and follow along step-by-step, which you should do as this is truly masterful market manipulation.
The key piece of information is Footnote 9 in the Form 3 which reads:
“The swap agreements shall continue until terminated as elected by the parties and currently have an initial reference termination date as set forth in column (2). The swap agreements provide the Pentwater Funds with economic results that are comparable to the economic results of ownership but do not provide them or the Reporting Persons with the power to vote or direct the voting or dispose of or direct the disposition of the shares that are referenced in the swap agreements (such shares, the "Subject Shares"). The Reporting Persons disclaims beneficial ownership of the Subject Shares except to the extent of its or his pecuniary interest therein, if any.”
But, each Form 4 and 13G/A adds a little bit of the story.
No I don’t have any idea what the long game is here. I don’t know if there is some turn around story or if this was just a good old fashion short trap and squeeze. I guess we will find out.
— AJ
Event Horizon Tools
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