Activist investors Carl Icahn holds a good share of Hertz (HTZ) in his portfolio. Earlier this month, the billionaire reported an increase in his holding of Hertz Global from an ~15.0% stake to an ~15.2% stake in the company.
Icahn has invested more than $1.5 billion in the car rental giant. The announcement was enough to give Hertz shares the “Icahn lift.” HTZ was up 2.8% in premarket trading on June 7, 2016, the day the news came out.
Hertz stock is up by more than 35% over the past month, ended June 22. However, a Goldman Sachs (GS) report indicated that the shares are currently at depressed levels. The stock is down by 17.2% on a year-to-date basis, and by ~38.4% over the past year. Icahn’s timing seems to be good on this stock.
Icahn currently has his representatives holding three out of the nine board seats of the company. In 1Q16, Hertz commanded about ~3.1% of Carl Icahn’s investment portfolio.
Icahn believes that Hertz has good potential value, provided it enacts certain changes. The company is already going in for a split. On June 6, the company announced that its board had agreed to split the company in two, separating its equipment rental business from its car rental business.
Consequently, the equipment rental business should start trading as a separate company, from June 30 onward. The equipment arm will have two of Icahn’s representatives sitting on its board.
This split is being viewed positively by the Market (SPY) (QQQ) (IWM), which is evident by the stock’s rise so far in June. The tax-free design for the split involves dividend distribution of all of the capital stock of the new company, Hertz Rental Car Holding Company.
In the final part of this series, let’s look at what this activist investor is currently eyeing.