Mesa Air Group, Inc. (fka MESAQ)

[Wheeeeee]

What I particularly like about mesa is:

They have a good current ratio. This is the current assets to the current liabilities. The ratio is near or over 2. This means that they have twice the amount of money to pay of any short term obligations (debt, not the security)/ Basically they are not at risk of drying up their cash and getting insolvant. This is important because otherwise they would have to attract expensive credit lines.

There was a debt conversion which was VERY bullish. A dollar of debt was traded for 1 or 2 shares max (dont know the exact conversion rate). This is important because for one dollar one could have bought 5 or even 10 shares. But they traded a dollar to far fewer shares. That is bullish. They chose fewer shares but to remove debt pressure. THis is an indication that the debt holders have hope (or particularly desparate to get out).

The total equity grew right after the crash
As of 2008-09-30 109.66
As of 2008-09-30 125.97
As of 2009-03-31 95.56
The last line is lower because they took a 68 million tax charge related to the share issuance -> the reason why a share buy back is not going to happen.

Their total equity is thus 95.56.
The current market cap is 20.25.
This means that if the company were to evaporate over night that every share would be worth 95/20 = aboutish 4.5 times the current share price. 4.5 * 0.14 = aboutish 50 to 60 cents.
They have more CASH than the market cap. Basically that means that they have more money cash in the bank than that the share price currently is at. This is literally buying 50 cents for the price of 14 cents. The problem here though is the quarterly burn rate. Fuel is NOT a real factor in the burn rate. Well it is if there are losses on hedging. The personell cutbacks will decrease the burnrate and that is good. Previous Q they had a profit when not taking in account the tax charge. But we must not forget what the money earned on the share issuance has for an effect on the earnings/cash levels.

Mesa has flatlined as where its competitors have dropped and moved up again. One of the reasons was the lawsuit (well 2 actually by delta relating to 2 contracts) and that was won. The other factor in play here were statements made by the CEO referring to a possible BK. This is not an issue since the statement related to Uniteds contracts and that was extended. (or it was the other of the 3 contracts they have - not delta).

Mesa is a value play in basis, then an earnings play. On top of that it has set up for a nice swing. But the fun starts when we get to squeeze the 200 ma daily. We have an additional catalyst in the form of a complete float dry out (the reason why I keep reposting that we want slow and steady rise and not a bunch of chasing idiots). As long as the float stays as dry as it is then we get nice steady and very big upmoves. The more idiots come in the more erratic the stock becomes and the higher the chance that it may irrationally pop down, so it might only take longer to reach the levels where this stock is supposed to be.

If the big boys are playing this then that means it is no use to complain or cheer about price movement. They can toss the price (and us) around like there is no tomorrow. It strikes me as logical that they would try to slam the price down to load up cheap. So think twice about getting scared.

ps: added on edit: perhaps do some DD into the possible losses on fuel hedging.