CASE STUDY: Harbor Diversified (HRBR)

December 18, 2022

Harbor Diversified (HRBR) is the parent company of Air Wisconsin, a major U.S. regional airline.  HRBR just signed a new five-year agreement with American Airlines to provide regional airline services starting in early 2023.

Regional airlines are crucial partners to major global airlines and are cost-effective.  Regional airlines can hire pilots and crews at lower rates.  Regional airlines operate specialized fleets and save on repairs by having dedicated hangars and maintenance crews.

Regional airlines are like a captive supplier somewhat protected from fluctuations in consumer demand by their global airline partners.  Regional airlines operate 41% of all scheduled flights in the U.S. and did better than global airlines during the pandemic because regional airlines don’t rely as much on international or business-class fares.

Here are the current multiples:

    • EV/EBITDA = 0.48
    • P/E = 3.18
    • P/B = 0.44
    • P/CF = 2.27
    • P/S = 0.47

Insider ownership is 43.8%, which is excellent.  TL/TA (total liabilities/total assets) is 52.7%, which is good.  ROE is 19.2%, which is also good.

The Piotroski F_score is 8, which is very good.

Here’s a good writeup on Value Investors Club:

Here’s another good writeup on (subscription required):

Intrinsic value scenarios:

    • Low case: Book value per share is $4.94.  In the worse case scenario, the stock may be worth half of book value.  Half of book value is $2.47 per share.  That is 15% higher than today’s $2.15.
    • Mid case: Under normal circumstances, the stock is worth at least book value per share, which is $4.94.  That is 130% higher than today’s $2.15.
    • High case: The stock is probably worth at least 14x normalized earnings, which are about $20 million.  14 x $20 million comes to $280 million.  Then we add net cash of $67.7 million plus $20 million owed by United.  The total value of HRBR comes to $367.7 million, or $6.70 per share.  That is over 210% higher than today’s $2.15.


The main risk is that HRBR’s only customer will be American Airlines.  (HRBR’s current contract with United expires in early 2023.)  But the contract starts in early 2023 and lasts for five years.  Also, HRBR has worked with American in the past.  It is likely HRBR will get a new contract five years from now, if not from American than from another airline.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

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