JANA Partners dumped nearly half its Hertz (HTZ) stake this week, ending its activist campaign and now owning just 4.9% of the company. During its activist holding period, the stock posted a -28% CAGR. Meanwhile, Carl Icahn stood by his car rental play, upping his Hertz stake by ~20% this week to 14.3%.

The biggest issue for HTZ going forward is the worry that Uber and the likes will cut into its business. Granted, HTZ still has a stronghold in the airport rental business, the big answer for preventing a distribution of its business from this new tech is to spend more on technology.

Activist ideas – Idea Generation and beyond

HTZ is already focusing on making technology a competitive differentiator. This includes moving to a cloud-based platform, designing customer-centric systems, and developing a mobile-focused product offering. The development of such infrastructure and platform is expected to take a year and a half but ultimately offer $150mm a year in cost savings.

This is either one of the most misunderstood companies around or one of the best shorts. Understanding the accounting for depreciation and capital intensive / resell potential is often overlooked. However, who really rents a car these days?

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