It was just a couple weeks ago that my Special Situations portfolio was buying shares in Hertz Global (HTZG.Q), and now I'm back to add to my position. While there's nothing truly new to report, the company offers a lot of optionality over the next year, and investors stand to benefit greatly.

As I detailed in my original buy recommendation, the key special situation at Hertz is the spinoff of its equipment rental unit early next year. Separating that unit will allow the fundamentals of the car rental unit to shine, which is one reason I'm buying now.

While there's plenty of time between now and the spinoff (and so plenty of time for the stock to go down, for whatever reason), I like the improving industry fundamentals. The space has consolidated to three large players: Hertz, Avis Budget, and Enterprise. That should help each player compete less on price, strengthening profitability.

The spinoff will also bring about $2.5 billion in cash Hertz's way as the parent company stacks the equipment rental business with debt. Hertz will use that cash to pay down some of its own debt, as well as to repurchase stock. Management estimates it can buy back as much as 20% of the stock, and that should juice shareholder returns, particularly as Hertz takes advantage of the improving industry.

There might be more return of capital for shareholders, since Hertz has committed to a higher leverage target, which may allow the company to "opportunistically look to return additional capital to shareholders on an ongoing basis," as mentioned in a recent company press release.

Foolish bottom line
My Special Situations portfolio will buy $500 of Hertz, and I'll continue watching as the special situation unfolds. We have lots of ways to win, and that's the kind of optionality I like. Like this idea? I have many more money-making ideas, and you can be the first to know them by following me on Twitter: @TMFRoyal. And check out my dedicated discussion board.

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