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Air Lease Corporation (AL): The Vilas Fund Thinks It’s a Bargain For Long Term Investors

Insider Monkey recently shared The Vilas Fund‘s Q1 2019 Investor Letter, in which the fund disclosed 34.3% return for the quarter. You can download a copy of the letter here. Aside from posting information about its performance, the fund also shared a few comments on several stocks in its portfolio, among which was Air Lease Corporation (NYSE:AL).

“Air Lease (AL)

Air Lease Corporation is an aircraft leasing company run by a highly experienced and capable management team. The company has grown earnings over 20% annually over the last 5 years and has a return on equity in the mid to high teens. On a cash earnings basis, adjusted to reflect the fact that they don’t pay cash taxes due to very high depreciation levels, the stock is trading at roughly 5 times forward earnings and 0.8 times book value. A tremendous bargain for long term investors as we believe the proper multiple should be roughly twice these levels. With growth in earnings, we believe the expected return of Air Lease common stock is in the low 20% range.”

Air Lease Corporation (AL): The Vilas Fund Thinks It's a Bargain For Long Term Investors


Air Lease Corporations is an aircraft leasing company that was launched nine years ago. Since the beginning of the year, its stock gained 26.42% and on May 10th it had a closing price of $38.90. Its market cap is of $4.32 billion, and P/E ratio is 8.05.

At the end of the fourth quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in AL a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, Royce & Associates was the largest shareholder of Air Lease Corp (NYSE:AL), with a stake worth $92.5 million reported as of the end of September. Trailing Royce & Associates was Basswood Capital, which amassed a stake valued at $39.7 million. Selz Capital, Citadel Investment Group, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.


Disclosure: None.

This article is originally published at Insider Monkey.


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