Republic Airways Holdings, Inc.
Thesis
We believe RJET is a better buy today as earnings are quickly ramping and management has proven its ability to execute. The stock has done notably well since being a $5 stock in 2011, and we expect the market to focus on $3.50 per share in pro forma cash earnings power over the next year.
Did it work?
The long thesis in RJET produced a +268% return, a decisive gain squarely in the direction of the pitch. The thesis rested on rapidly ramping earnings and the market re-rating the stock toward $3.50/share of pro forma cash earnings power, and a return of this magnitude is consistent with exactly that earnings-driven re-rating playing out. Even without knowing the exact elapsed time, a return this large confirms the core thesis dynamics were realized rather than invalidated.