Leap Wireless International, Inc.
Thesis
Leap Wireless is a distressed equity trading at around $6 per share, representing a small fraction of its total enterprise value. The investment thesis is based on the belief that the liquidity profile is decent enough to limit downside risk, and the assets should create enough value for the bank debt to recover to par. The market has been overly cynical about the company's operational recovery, presenting a potential upside.
Did it work?
The investment thesis for Leap Wireless has played out successfully, as the stock price increased by 375.2% over 146 months, significantly exceeding the initial price of around $6 per share. The recovery in value indicates that the market's initial cynicism was misplaced, and the company's operational recovery has indeed created substantial upside, validating the thesis.
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