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    Value Investing Airplane Leasing Industry

    April 08, 2019

    Value Investing Airplane Leasing Industry

    Airplane Leasing Industry

    Posted: 07 Apr 2019 06:19 PM PDT

    The airplane leasing industry was a complete unknown for me until just recently. Because a couple of value oriented funds that I follow have bought both Aercap and AirLease, I thought it would be interesting to take a look at both. After just a couple of hours studying them, I became fascinated.

    The business works more less like this: The company buys an airplane for 100M, it borrows those 100M at a 4% interest rate and then leases that same plane for a 12% interest rate (on the original price). If we take out the depreciation & amortization charges that are usually 4% (the plane's lifetime is about 25 years), the operating expenses, and the taxes, there are 3% left, and that's the profit the company makes (the spread). It's a simple business model, and although at first sight one might think that there are no real barriers to entry, it's not quite like that.

    Fortunately Aercap has an amazing capital allocator as the CEO. One that is constantly thinking about how to maximize shareholders returns and one who has bought back 35% of the company's shares outstanding in the last 5 years and still thinks the best investment the company can make is buying its own shares at a PE of 6.6 and a P/B of 0.75.

    In case you're interested in knowing more about the business, here's my write-up. https://allinstocks.com/aercap/

    submitted by /u/manuelbeanster
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    Has Greenblatt's magic formula stopped working?

    Posted: 07 Apr 2019 09:04 AM PDT

    I have been searching the web for people's experiences from the latest years, and it appears that the method has been stagnant. Even though Greenblatt claimed in advance that this can happen for 3-5 years, does it still make sense in the context of a very strong bull market?

    Do you think it may simply be that it stopped working because too many people follow it?

    submitted by /u/RdMrcr
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    Favorite books-gimme a few and why.

    Posted: 07 Apr 2019 11:08 PM PDT

    1. Intelligent investor- no explanation needed
    2. The personal MBA- good insight into business, value creation, customer creation and just business principles in general.
    3. Warren buffet interpretation of financial statements- first book I read on finance and it touches on interpretation and uses buffets past investments as examples.
    4. Enough- by John bogle- just great information on being content and the financial industry in general.
    submitted by /u/you_who_sleep
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    I am considering buying a share of stock, but I have no idea to find out the expected return rate. The stock value is $25.45, and continuous 5% growth is expected forever......

    Posted: 08 Apr 2019 01:14 AM PDT

    I am looking to purchase a share of common stock currently valued at $25.45 from a company that just paid a dividend of $1.95, and dividends are expected to grow at a 5 percent annual rate forever. How do I find the stock's expected rate of return?

    ​

    I have plugged in a formula for valuing common stocks (Vcs = [dividend] x [1 + growth rate]) divided by (return rate - growth rate), but I cannot solve this algebraically for the life of me. I have tried with calculators, but I keep getting an incorrect answer on the calculator. How do these equations balance each side? How do I find the return rate?

    submitted by /u/JairBolsanaro
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