DRTGF - Jet2: Trading Cheap Despite Having Net Cash And Likely Low Double-Digit Growth For Years To Come

2025-01-17 08:00:00 ET

Summary

• We have owned Jet2 since the inception of the fund and prior.
• Jet2’s economics are very different to an airline and in our view understanding this is crucial to understanding why the company continues to succeed.
• We have found that investors dismiss customer service because it is qualitative, but it is the key reason why Jet2 is likely to earn £2/shr of net income this year,.

The following segment was excerpted from this fund letter.

Jet2 ( DRTGF ) is a UK based package holiday business. The company is run by CEO Steve Heapy and CFO Gary Brown, both of whom have high integrity, exceptional customer focus, and concentrate on long term value creation when allocating capital. They have done an outstanding job, with Jet2’s excellent customer service and retention driving profitable market share growth from 2% to 22% over the last decade. We initially invested in the business around £5/shr, the stock trades at £14/shr today, and we think will be worth £30/shr in three years....

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