We're posting up notes from the Sohn New York Investment Conference. Next up is David Einhorn of Greenlight Capital who presented long Aercap (AER), short GATX (GATX).
David Einhorn's Sohn New York Presentation
• Companies that lease airplanes have better businesses than companies that lease railcars (long Aercap, short GATX)
o Airline leases are usually at least 10 years with a 25 year life
o Railcar leases are 5 years when it’s new or less when it is used. Useful life is around 45 years
o Airlines in cyclical growth
o Railroads are more cyclical
o Airplane utilization much higher than railcar
o Can move airplanes around easier
o Credit has cost airline leasing companies 0.1%. Cost railcar leasing companies nothing
o Railroads becoming more efficient and using less railcars
o Aercap- airline leasing in growing industry. Average age 6 years. Sells 15 year old planes. Longer leases
o GATX-Railcar leasing. 14% market share. Cyclical and secular headwinds. Provides maintenance to customers. Average 20 year age. More dependent on releasing rates. Recent leases are shorter term
o Aercap trades at a 50% discount to GATX even though it’s a better business both on P/E and P/B
o Aercap is buying back stock. Reduced shares outstanding by 36%. Will continue to buyback stock
Be sure to check out the rest of the Sohn New York conference presentations.
Tuesday, May 7, 2019
David Einhorn Long Aercap, Short GATX: Sohn New York Conference
Wednesday, October 25, 2017
Greenlight Capital Q3 Letter: New Stakes in HPE, Tempur Sealy, Micron
David Einhorn's hedge fund firm Greenlight Capital returned 6.2% in the third quarter and is now up 3.3% year-to-date. Their third quarter letter outlines they had average exposure of 118% long and 73% short.
At the end of Q3, Greenlight's top five positions (alphabetical order) were AerCap, Bayer, CONSOL Energy, General Motors, and gold.
New Positions in Hewlett Packard Enterprise, Tempur Sealy, Micron
The letter highlights that they established a few new positions. First, they entered Hewlett Packard Enterprise (HPE) shares. They see earnings of $1.40 to $1.70 over the next few years as the company recently sold its outsourced services and software businesses. They bought at $13.29 per share.
Second, they re-entered a previous holding: Micron Technology (MU). They feel the DRAM market has improved as have the company's earnings, though think investors are underappreciating the improvements. They bought around $29.21.
Thirdly, Einhorn's firm entered Tempur Sealy (TPX). We posted Einhorn's presentation on Tempur Sealy from the GIBI Dallas Conference recently as well.
Other interesting notes: they covered their short of Best Buy (BBY), closed their longs in PVH and Axiare Patrimonio.
Embedded below is Greenlight Capital's Q3 letter:
Credit to ValueWalk who posted it first.
For more hedge fund letters, we also posted up Third Point's Q3 letter here.
Monday, July 17, 2017
Greenlight Capital Q2 Letter: New Toshiba Position
David Einhorn's hedge fund firm Greenlight Capital is out with its second quarter letter. During the quarter, they lost 4% and thus far for the year are down 2.8% net. Their average exposure was 111% long and 79% short.
Their five largest longs in alphabetical order are: AerCap (AER), Bayer (Germany: BAYN), CONSOL Energy (CNX), General Motors (GM), and Mylan (MYL).
They also point out short positions in their 'bubble basket' include Amazon (AMZN), athenahealth (ATHN), Netflix (NFLX), and Tesla (TSLA) that have moved against them.
The letter walks through some of their thoughts on each. While Greenlight is long one auto manufacturer (GM) and short another one via Tesla, they don't do pair trades.
Also, the letter highlights that Greenlight started a new long in Toshiba (Japan: 6502) and outlines their thesis there.
Lastly, they also note they've sold their longs in Altice and Time Warner (TWX), as well as covered their decade-long short position in the credit rating agencies and their short of Mallinckrodt (MNK).
Embedded below is Greenlight Capital's Q2 letter:
For more from this manager, be sure to check out Einhorn's presentation on shorting Core Labs.
Wednesday, July 27, 2016
Greenlight Capital Q2 Letter: Long Chemours (CC)
David Einhorn's hedge fund Greenlight Capital is out with its Q2 letter. They feel that the 'Brexit' won't be a significant economic event by itself.
Turning to specific stocks, Greenlight outlines its thesis on Chemours (CC), a recent spin-off from DuPont (DD).
They note, "CC should benefit from the continued recovery of TiO2 prices. Further, EU regulations are driving adoption of CC's next generation refrigerant Opteon, which should increase fluoroproduts profits. Lastly, management can reduce costs and shutter unprofitable businesses now that the company is independent of DuPont. We expect the stock to appreciate as investors refocus on the earnings power of the business, which we think will approach $2.00 in 2017. Our overall average purchase price is $6.58."
The hedge fund also exited numerous longs during the quarter: Macy's (M), American Capital Agency (AGNC), Baxter (BAX), Oil States International (OIS).
They also covered short positions after the Brexit volatility, including: Intuitive Surgical (ISRG), Under Armour (UA), and United Rentals (URI).
At the end of Q2, Greenlight's largest disclosed longs (in alphabetical order) were: AerCap, Apple, CONSOL Energy, General Motors and gold. Average exposure was 96% long and 69% short.
Greenlight's Q2 letter is embedded below:
H/T ValueWalk
For other recent hedge fund letters, we also posted up Third Point's Q2 letter here.
Wednesday, April 29, 2015
What We're Reading ~ 4/29/15
A book with a really cheesy title that supposedly 3G Capital hands out [Amazon]
More detailed notes from Charlie Munger's annual meeting part 1 & part 2 [Forbes]
A dozen things learned about investing from Peter Lynch [25iq]
The first rule of short selling is: don't talk about short selling [Dead Companies Walking]
Margin debt: a market indicator that predicts nothing [Bloomberg View]
The great bond conundrum [Economist]
Wang Jianlin - a billionaire at the intersection of business and power in China [NYTimes]
On China in Africa [Council on Foreign Relations]
Common biases that affect business decisions [HBR]
Jeff Bezos penned his annual letter [Amazon]
The biggest threat to your portfolio [Reformed Broker]
Examining Einhorn's latest investment: AerCap Holdings [Value and Opportunity]
A look at Windstream [J.Allen Capital]
The cable era is over [Bloomberg View]
A profile of billionaire banker Andy Beal [Bloomberg]
Homeownership rate falls to lowest since 1993 [HousingWire]
The slow death of the University [Chronicle]
Tuesday, April 21, 2015
Greenlight Capital Q1 Letter: David Einhorn Cuts Net Exposure In Half
David Einhorn is out with Greenlight Capital's first quarter letter to investors. Greenlight finished Q1 -1.7% net of fees. While many investors will care more about Einhorn's equity picks, we think the more noteworthy takeaway is the fact that the hedge fund has cut net exposure in half from 30% down to 14% net long.
Greenlight writes, "Bottom up: short candidates are easy to find ... the opportunity set on the long side is quite constrained. Top-down: Valuations are on the high side and earnings are in a precarious spot."
Einhorn then touches on the Federal Reserve, noting that, "How fast it tightens should be less important than the fact that it will tighten."
As far as individual equity moves go, Greenlight made the following adjustments: started new positions in AerCap (AER), Chicago Bridge & Iron (CBI), as well as re-entering General Motors (GM) shares. They sold Aetna (AET), closed shorts in Safeway (SWY), Freescale Semiconductor (FSL), and Lorillard (LO). However, they started a new short in Reynolds American (which acquired LO.)
Embedded below is Greenlight Capital's Q1 2015 letter with the thesis on their new investments:
