SRS Investment Management Mitigates Losses with Avis Budget Group Investment

SRS Investment Management, led by Karthik Sarma, has emerged as a standout performer in the hedge fund world despite the significant downturn in Avis Budget Group’s stock this year. While Avis has plummeted more than 42 percent in 2024 after a meteoric rise over the past two years, SRS has managed to mitigate its losses through a combination of strategic investments and a diversified portfolio.

At the end of last year, SRS owned nearly 32 percent of Avis Budget’s shares, making it a significant portion of the hedge fund firm’s U.S. common stock portfolio. However, the losses at SRS’s long-short and long-only funds have been relatively muted compared to the steep decline in Avis’s stock price.

One key factor contributing to SRS’s resilience is its success in short positions, which have helped offset losses in Avis. Additionally, Avis represents only a middle-single-digit percentage share of the overall portfolio, with the bulk of the shares held in a special purpose vehicle limited to internal SRS capital.

Furthermore, SRS has investments in non-U.S.-listed companies that are not reflected in its quarterly disclosures, including top performers like Netflix and Meta Platforms. These investments have helped buoy SRS’s overall performance and offset losses in Avis and other underperforming stocks.

Despite the challenges posed by the volatile market conditions, SRS has a strong track record of outperforming major benchmarks like the S&P 500 and MSCI. The firm’s long-short flagship fund has compounded at 12.1 percent since inception, while the long-only fund has compounded at 18.1 percent since its launch in 2015.

Karthik Sarma, the founder of SRS Investment Management, has been recognized for his success in the hedge fund industry, ranking 16th on this year’s Rich List. With a background that includes stints at Tiger Global and McKinsey & Co., Sarma has built a reputation for strategic investing and strong performance in challenging market conditions.

Overall, SRS Investment Management’s ability to navigate the ups and downs of the market, capitalize on short positions, and maintain a diversified portfolio has positioned the firm as a standout performer in the hedge fund world, despite the challenges posed by Avis Budget Group’s downturn.