Is it Still Safe to Own Spirit Airlines (SAVE) Shares?

Jackson Peak Capital, an investment management firm, released its third quarter 2023 investor letter, a copy of which can be downloaded here. Established in March 2023, the firm observed its second full quarter of investment activity during Q3 2023. Despite challenging market conditions, Jackson Peak excelled in Q3, achieving a robust return of +11.8%. The quarter posed difficulties for the broader markets, but Jackson Peak’s alternative long-short investment strategy proved successful, securing notable wins in each segment of the portfolio. Take a moment to review the fund’s top 5 holdings to gain insights into their primary investment choices for 2023.

In its Q3 2023 investor letter, Jackson Peak Capital mentioned Spirit Airlines, Inc. (NYSE:SAVE) and explained its insights for the company. Spirit Airlines, Inc. (NYSE:SAVE) is a Miramar, Florida-based airline company with a $958.4 million market capitalization. Spirit Airlines, Inc. (NYSE:SAVE) delivered a -54.93% return since the beginning of the year, while its 12-month returns are down by -59.28%. The stock closed at $8.78 per share on November 9, 2023.

Here is what Jackson Peak Capital has to say about Spirit Airlines, Inc. (NYSE:SAVE) in its Q3 2023 investor letter:

“The case that is top-of-mind in Q4/Q1 is JetBlue/Spirit Airlines (NYSE:SAVE) vs. DOJ. We will be following the trial closely as it progresses in October and November. Post-Q3, we acquired a position in SAVE calls in late October after they plummeted in value post-earnings and in the days leading up to the trial. Depending on our read of how the trial progresses, we will scale the position up (it is a subscale position today) or down. This arb is a lower probability than the Activision deal (note: it is a horizontal merger after all, not a vertical merger), but we think the market is mispricing the potential likelihood of success. The significant spread results in a position with substantial positive expected value in our view, particularly when structured via options and position size managed judiciously.”

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Our calculations show that Spirit Airlines, Inc. (NYSE:SAVE) does not belong on our list of the 30 Most Popular Stocks Among Hedge Funds. Spirit Airlines, Inc. (NYSE:SAVE) was in 26 hedge fund portfolios at the end of the second quarter of 2023, compared to 25 funds in the previous quarter. Spirit Airlines, Inc. (NYSE:SAVE) delivered a -44.68% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q3 2023 page.

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Disclosure: None. This article is originally published at Insider Monkey.