We’re attracted by the growth potential of Webjet’s ‘Webbeds’ division, which has grown by acquisition to become the number two provider to the fragmented bedbanking industry. An opportunity exists to build a materially bigger business over time.A big factor which got us over the line was chief executive John Guscic, who owns $75m worth of Webjet stock and has executed strongly since joining Webjet in 2011, with earnings per share compounding at 20% p.a. under his tenure. John’s experience at GTA (now Hotelbeds), Webbed’s main competitor, gives us confidence in his strategy, as does $809k of recent director buying.Webjet’s share price was hit hard when Thomas Cook, the UK’s oldest tour group operator, went bankrupt during the month, which knocked $7m from Webjet’s earnings and caused a EUR 27m bad debt. This provided an attractive entry point into a business with good long term prospects, aligned management and strong underlying momentum.
“WE’RE ATTRACTED BY THE GROWTH POTENTIAL OF WEBJET’S ‘WEBBEDS’ DIVISION, WHICH HAS GROWN BY ACQUISITION TO BECOME THE NUMBER TWO PROVIDER TO THE FRAGMENTED BEDBANKING INDUSTRY."
Webjet’s online travel agency is highly exposed to the Australian economy, which we’ve been concerned about for some time. But following several interest rate cuts and loosened mortgage lending standards there’s tentative signs of improvement. Webjet’s total transaction value increased 9% in the first six weeks of FY20, and website traffic data suggests that’s continued. “Strong opinions, weakly held” sums up our strategy with our Webjet investment, and we’ll be looking to hold until disconfirming evidence mounts.For those with an Intelligent Investor subscription, we expanded on our Webjet investment case here.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)