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Air Lease: Owner-Operated Aircraft Lessor with Compounder Potential

October 17, 2018 in Equities, Financials, Letters

This article by MOI Global instructor Shreekkanth Viswanathan is excerpted from a letter of SVN Capital, based near Chicago, Illinois.

My objective with SVN Capital is to find “Compounders” — companies that can generate high Return on Capital and re-invest such capital at similar or better rates, run by good management teams that have “skin-in-the-game” and are aligned with their outside shareholders, that are trading at attractive valuation. We need only a handful of companies like this to do very well over time.

One such company, I believe, is Air Lease Corp. (AL).

On September 17, 2018, I had the pleasure of sitting down for dinner with the management team of Air Lease Corp. (AL). I met Steve Udvar-Hazy (Chairman), John Plueger (CEO), and Greg Willis (CFO). This meeting was organized as part of aircraft leasing conference, which I attended the following day, by RBC Capital, an investment bank. This is an outstanding management team.

Below I will provide a high-level business description, major takeaways from the meeting, and why we own it in our portfolio.

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Highlights from European Investing Summit 2018

October 16, 2018 in Diary, Equities, European Investing Summit, European Investing Summit 2018, Ideas

The following idea snapshots have been provided by the respective instructors or compiled by MOI Global using information provided by the instructors. For the full investment theses, please review the in-depth slide presentations and replay the conference sessions.

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Jean Philippe sobre cometer grandes errores

October 15, 2018 in Miscelánea, MOI Global en Español

NOTA DEL EDITOR: El siguiente texto escrito por Jean Philippe Tissot, miembro de MOI Global, es extraído de la carta anual 2017 de Tissot Ayram Family Partnership.

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En 2017 compré una empresa llamada Gemini Corporation1  y la vendí con una pérdida del 50%. El 100% de este error es mi responsabilidad. Déjenme explicar lo que aprendí de esta experiencia.

Los servicios de Gemini consisten principalmente en construir y mantener instalaciones energéticas e industriales. Los mercados objetivos de la empresa, son: petróleo y gas, arenas bituminosas, instalaciones de tuberías y midstream, procesamiento de hidrocarburos, energía y otros industriales.

La empresa brinda servicios a sus clientes entregando proyectos durante todo el ciclo de vida de sus activos. En 2014, la compañía firmó el contrato más grande de su historia: una  instalación de carga de trenes. La compañía no tenía la experiencia para un proyecto tan grande y terminó teniendo sobrecostes que generaron grandes pérdidas. Como resultado de esto, la gestión fue reemplazada en 2016. El nuevo equipo gestor llegó e inmediatamente compró acciones en el mercado abierto y continuó haciéndolo durante un par de meses.

Vi los datos financieros de 2016 que mostraron un balance sin deuda. La empresa se estaba negociando a dos veces EBITDA y a una vez el flujo de caja (incluyendo capital de trabajo) y el nuevo equipo gestor, con el que tuve la oportundiad de hablar, parecía honesto y claramente arriesgaban el pellejo. La gestión se mostró muy entusiasta con los posibles contratos que la empresa estaba analizando y tenían unas previsiones que indicaban que los ingresos en 2017 serían más altos que en 2016.
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Imperial Brands: Tobacco Firm with Pricing Power at 6+% Dividend Yield

October 13, 2018 in Consumer Staples, Equities, Europe, European Investing Summit, European Investing Summit 2018, Ideas, Large Cap

Edward Blain of Orbis Investments presented his in-depth investment thesis on Imperial Brands (UK: IMB) at European Investing Summit 2018.

Thesis Summary:

Imperial Brands recently traded at 10x earnings, as compared to the company’s long-term average of 12x. The stock pays a dividend yield of 6+%. While this reflects a pessimistic view of Imperial’s prospects, Ed is confident the company can raise prices sufficiently to drive continued earnings growth even as smoking rates continue to decline.

The tobacco sector has a long history of overcoming competitive threats (ever-increasing regulatory scrutiny, declining smoking rates, disruptive new technologies) and delivering superior returns for patient investors.

The full session is available exclusively to members of MOI Global.

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About the instructor:

Edward Blain, Master of Arts (Honours) in History (University of Cambridge), Chartered Financial Analyst. Edward joined Orbis in 2010. Based in London, he is a member of the Europe investment team and is one of the stockpickers who directs client capital in the Orbis Global Equity Strategy. He previously worked as a political adviser to senior members of the Conservative Party.

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