Opinions
Michael Sprung
Westjet Airlines
WJA-T
DON'T BUY
Jul 28, 2014
$27.420
Stock price when the opinion was issued
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DON'T BUY
Considering the Boeing 737 crash. They came out with good numbers and guidance in the last quarter after a few bad quarters. Their suspension of the 737s is not a huge thing, but rather a nuance. He doesn't like airline stocks and prefers Air Canada that he just sold. This is not a bad entry point. Be careful: have a buy and sell price.
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PARTIAL SELL
There is some market risk in the overall market. It is an all cash deal. You will get $31 for it. There is a 4% difference between market and the deal. If you can do better than 4% somewhere else with a similar degree of risk, then you should sell. He would take some money off the table.
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COMMENT
A really interest deal with Onex. He has been a long term fan for years. His first professional 10 bagger. He is not convinced Onex over paid -- they probably saw this as a great time -- comparable to US peers. He thinks the regulators will approve the deal.
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Generally the airlines have done extremely well over the last year or so. Doesn’t like participating in the airline industry. Thinks they will be squeezed a little by fuel costs, particularly in Ontario with their proposed tax on jet fuel. Airlines in general have extremely high capital costs and are extremely expensive to run. This is not an area that he would be jumping into.