Up 0.2% in morning trade today, the S&P/ASX 200 Index (ASX: XJO) has gained 3.8% since 12 July, with no help at all from one diving ASX 200 stock.
The laggard in question is Web Travel Group Ltd (ASX: WEB).
As you're likely aware, Web Travel spun off its online travel agency business, Webjet Group (ASX: WJL), in September. That allows Web Travel to focus on its WebBeds business, which connects hotels and other travel service providers to travellers worldwide.
On 12 July, shares in the travel industry company closed the day trading for $9.23. At the time of writing today, those same shares are changing hands for $4.62 apiece, down 49.9%.
As you can see on the chart above, most of that selling came on a single day.
On 14 October, shares in the ASX 200 stock plunged 35.6% after the company downgraded its earnings and margins guidance for the first half of FY 2025.
The Web Travel share price rebounded 13.5% on 27 November when those half-year results were reported. Investors reacted positively to the 25% year on year increase in total transaction value (TTV) to $2.59 billion, alongside a 1% boost in revenue for the six months to $170.4 million.
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Buying the dip on this crashing ASX 200 stock
Web Travel's big October share price crash didn't escape the notice of the Blackwattle Small Cap Quality Fund's portfolio managers, Rob Hawkesford and Dan Broeren.
And with the ASX 200 stock rebounding from its October lows, Web Travel was a key contributor to the fund's performance in November.
Commenting on the demerger of Web Travel, the fund managers said, "The demerger took place so management, and the market, could focus solely on the significant opportunities available to the hotel business."
They noted that their fund initiated a position in Web Travel following the October downgrade to the company's near-term earnings outlook.
The fund managers said:
The share price was down 50% from its July highs where the stock had rallied post a March strategy day where highly regarded CEO John Gusic outlined his long-term plans for the business including growth in Total Transaction Value (TTV) from $4 billion this year to $10 billion in 2030.
The softness in near-term trading outlined in October gave cause for the market to question the viability of management's long-term targets.
But Blackwattle's portfolio managers held a different view. They noted:
At the company's recent interim result announcement in November, Gusic reaffirmed his commitment to the long-term targets. While time will tell if these are achievable, with the stock trading at 17x FY26 EPS [17 times forecast earnings per share for financial year 2026], investors almost have a free option.
As for investing in this beaten-down ASX 200 stock, Blackwattle's fund managers said, "Gusic's stellar track record suggests he deserves a better probability than that."
Hawkesford and Broeren have clearly been paying attention to the Oracle of Omaha's advice.
"A great manager is as important as a great business," Warren Buffett famously advises.
