Harbor Diversified Inc

Harbor Diversified (HRBR) is mentioned as part of the fund's investment in expert market securities, which trade at low multiples of earnings or deep discounts to book value. However, there is no specific argument made about its future performance or valuation.

We began accumulating shares of Harbor Diversified after its December 18, 2025, announcement that the company was selling its Air Wisconsin subsidiary and all related aircraft in three separate deals for aggregate consideration of $113 million. At that time, they had approximately $104 million in cash, or $1.78 per share, and the stock was trading at $1.50 per share. We estimate current cash at approximately $205 million, or $3.50 per share. Harbor should become current in their SEC filings in a few months, which should remove the expert market designation and allow the stock to trade over-the-counter. We expect them to make one or more acquisitions and believe a tender or reverse/forward split should result in the share price trading within 10-15% of cash levels.

We began accumulating shares of Harbor Diversified after its December 18, 2025, announcement that the company was selling its Air Wisconsin subsidiary and all related aircraft in three separate deals for aggregate consideration of $113 million. At that time, they had approximately $104 million in cash, or $1.78 per share, and the stock was trading at $1.50 per share. We estimate current cash at approximately $205 million, or $3.50 per share. Harbor should become current in their SEC filings in a few months, which should remove the expert market designation and allow the stock to trade over-the-counter. We expect them to make one or more acquisitions and believe a tender or reverse/forward split should result in the share price trading within 10-15% of cash levels.

Harbor Diversified is a recent addition to the fund, purchased after their announcement of selling the Air Wisconsin subsidiary for $113 million. Despite estimating a loss of $60 million in 2025, we believe that after the sale, Harbor will have around $180 million in cash and securities. This equates to approximately $3.08 per share against the current price of $1.50, indicating significant upside potential. The company is also evaluating strategic alternatives, which could lead to attractive acquisitions or capital returns to shareholders, further enhancing its value.

We noted last quarter our residual position in Harbor Diversified (HRBR), which doubled in Q4 on concrete news about their plan to sell their remaining assets for over $100m. Even after doubling, the stock continues to trade near half of our estimate of their current liquidation value.

Harbor Diversified (HRBR) announced an LOI to sell Air Wisconsin this quarter. While shares trade around $0.75, their last reported quarterly financials showed ~ $2/share in cash. We expect eventual proceeds above current prices but remain cautious about timing given limited disclosure. This indicates a potential undervaluation of the stock, suggesting that the market has not fully recognized the value of their cash position and the upcoming sale.