Aercap
an update!
By Manuel Maurício
February 24, 2021
Aercap has gone up 87% since I’ve bought it for the Portfolio almost one year ago at $24.89. In fact, if it weren’t for the dollar devaluation in comparison to the euro, we’d be talking about a return higher than 100% in less than one year. Temporary dislocations in the stock market (volatility), although feared by many, are welcome by the investors who do their homework and who have the cash to take advantage of them.
The recent news about the efficacy of the vaccine have helped raise the expectation that we’ll all be flying again soon. It’s my conviction that we’ll likely witness a craze about travelling when people feel safe again. I’m dying to travel and I will surely do it as soon as I feel its safe.
I’ve always said that these companies should trade at least for 10x earnings or 1x book value. The book-value per share for Aercap was $69 in the third quarter of 2020 so the near term upside potential has gone down to 34%.
Although I still consider this to be a good upside, and while I still see Aercap benefiting from long term willingness to travel together with weakened competition, the risk reward balance has changed quite a bit. I’ll be reducing Aercap’s weight in the Portfolio to half of its current value tomorrow at the closing price stated that I can do it at around $50 per share.
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