Why Flybe Group PLC Shares Plummeted

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Flybe (LSE: FLYB) plunged more than 15% in early trade on Tuesday following a notification of the sale of shares by Rosedale Aviation Holdings.

So what: The shares sold represent approximately 48.1% of Flybe’s issued ordinary share capital — accounting for Rosedale’s entire interest in the ordinary shares of the company. As a result of this transaction, the free float of the Company is expected to increase to 85%.

Now what: Pardon the puns, but Flybe’s share price has had a turbulent time over the last year, though it has recently taken off (sorry) to fly (okay, I’m done) above 80% in the last 12 months, beating the FTSE 100’s c.20% gain.

But be careful when investing in small caps like these: back in May, easyJet bought Flybe’s Gatwick slots for £20m, while the end of June saw disappointing final results that included a 20%+ reduction in UK head count and sent the shares down to a low of 40.5p.

It’s a hugely competitive industry (and with regards to the aforementioned Gatwick news, what good is an aeroplane if there’s nowhere to park it?), with Warren Buffett famously saying that investors would have been better off had Orville Wright been shot down at Kitty Hawk… it’s worth remembering that a consistent performance is the best kind of performance, not one full of peaks and troughs.

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> Sam does not own shares in any of the companies mentioned.