David Einhorn’s Top 5 Stock Picks

3. AerCap Holdings N.V. (NYSE: AER)

Value: $105,877,000
Percent of David Einhorn’s 13F Portfolio: 6.36%
No. of Hedge Fund Holders: 40

AerCap is one of the largest aircraft leasing companies in the world. In 2014, it bought International Lease Finance Corporation. The company is in the news after General Electric confirmed that it would sell its aircraft leasing business to AerCap for $30 billion. AerCap shares have gained about 100% over the last 12 months. David Einhorn’s hedge fund owns 2.3 million shares of the company, worth over $105 million.

The company is getting the attention of the smart money, as 40 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, up from 38 funds a quarter earlier. Horos Asset Management said in its Q4 2020 letter that they increased their stake in AerCap Holdings N.V. (NYSE: AER).

Here is what Horos Asset Management has to say about AerCap Holdings N.V. in their Q4 2020 investor letter:

“Regarding AerCap, we believe that the high uncertainty surrounding its aircraft leasing business has slowly begun to subside. On the one hand, the relatively greater global control over the pandemic and the work of airlines to increase flight safety to the best of their ability has allowed a gradual recovery in air traffic. Although, realistically, it is still far from desirable levels, the trend is positive. On the other hand, the eagerly awaited vaccines to combat COVID-19 may mark a definitive turning point for the airline industry, once the population begins to be immunized. While we are well aware that the scenario may change again (new, more contagious strains, less effective vaccines than expected or new lockdowns), we believe that AerCap’s financial and liquidity risk has been drastically reduced.

In addition, the management team has demonstrated its ability to adapt to this environment by renegotiating with Airbus and Boeing a very significant delay in the purchase of new aircraft, thereby reducing its investment needs, as well as taking advantage of the easing of capital markets to refinance debt at lower rates. Finally, the company realized an impairment in the fleet value of just over $900 million last quarter, impacting the risks of expected cash flows for its older aircraft. After this impairment (the only and last one they expect to make), AerCap’s NAV stands at 69 dollars per share at the end of the third quarter, 50% above its share price at the time of writing and despite having risen by 330% from the lows reached during the worst of the crisis.”