Icahn's past record has both hits and misses. This time he's going after an entrenched board whose insiders hold 60% of the shares.
But this time Icahn also has the government on his side, in the form of the EPA. Their fines over engines that did not comply with regulations forced Navistar to start sourcing engines from Cummins (CMI). The company has shelved its diesel technology project and fired the CEO behind it.
The Cummins deal, however, puts in focus another big problem for Icahn, the fact that the rest of the U.S. industry is getting behind it rather than pushing it over the cliff, as may have happened in previous decades. Caterpillar (CAT), for instance, is going to continue to buy from Navistar and - by extension, from Cummins.
All this tells me where your play should be. You shouldn't be betting in Icahn, but on Cummins. At its current price of just short of $100/share you have a PE multiple under 10, with an international footprint expanding through a joint venture with Hyundai.
If Icahn can get some results out of the new Navistar management, then the company might be attractive. But for now the best play for those who are rooting for him remains Cummins. The industry is growing, the stock's cheap and profitable.