Fairholme Capital, the third largest shareholder in Hertz Global Holdings, has cut its stake in the car rental giant.

A reduction of over a third was announced by Fairholme Capital Management LLC, leaving the group with just an 8.5 per cent stake in the car rental specialist.

Through its numerous investment vehicles, Fairholme Capital now owns roughly 34.9 million shares in Hertz, according to its filing late last week. The group had previously owned around 56.2 million shares – equivalent to 13.6 per cent of the total Hertz Global Holdings portfolio.

Despite the downsizing of its stake, Fairholme Capital still remains the third largest shareholder with the automotive group, behind the Carlyle Group and Clayton, Dubilier & Rice, who between them account for around 32 per cent of the share stock.

The announcement comes at a time when Hertz is involved in an increasingly bitter battle with rival car hire company Avis for the takeover of the smaller Dollar Thrifty Automotive Group, with the current phase of due diligence being undertaken by its competitor. Success for either would allow them to consolidate as a multi-brand coalition which could have valued market dominance in the highly competitive rental market. Neither Fairholme Capital nor its larger shareholders in Hertz have any stake as yet in Dollar Thrifty.

The Miami-based Fairholme Capital was founded by equity manager Bruce Berkowitz and has roughly $10.70 billion in assets as at March 31, according to their latest ownership filing. Research firm Morningstar Inc named Berkowitz as the US stock manager of the past decade in January.