The Misfits: Air Transport Services Group (ATSG)

A long term value creator that has likely left many investors with catastrophic losses.

Victor Vasnetsov, The Flying Carpet, 1880, oil on canvas, (Nizhny Novgorod State Art Museum)

In brief moments of reflection lately, I keep revisiting one question: Can a stock simultaneously beat the market over the long term and still be a terrible investment for individuals?

Patrick Industries (NASDAQ: PATK) was the company that started down this rabbit hole. The company’s stock has delivered returns more than 3x the market over the past 30 years but suffered price declines of 70% and 97% during the dot-com crash and the Great Recession, respectively. The optimist in me wants to say this is the power of buying great companies and holding through tough times, but it’s hard to imagine many of us watching a stock drop 97% and not doubting the original thesis.

It seems that a stock like this could just as easily produce a permanent loss of capital for an investor as it has generated a market-beating return.

This brings me to aircraft leasing and flight operations company Air Transport Services Group (NASDAQ: ATSG). Like Patrick, it also operates in an economically sensitive industry. Its returns over the years have solidly beat the market. It has also experienced vomit-indicating declines (down 97% from July 2007 to March 2009 and currently down 61% from its high in March 2022).

Let’s take a deeper look at the company’s business and how it has been successful while still susceptible to these large share price declines and more .

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