Here’s Why Askeladden Capital is No Longer Holding AerCap Holdings (AER)

Askeladden Capital, an investment management company, released its second quarter 2022 investor letter. A copy of the same can be downloaded here. Year to date, the fund was down 6% net of management fees. It outperformed the benchmark index in the quarter, which was down 7%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

Askeladden Capital discussed stocks like AerCap Holdings N.V. (NYSE:AER) in the second quarter investor letter. Headquartered in Dublin, Ireland, AerCap Holdings N.V. (NYSE:AER) is an aircraft leasing company. On September 19, 2022, AerCap Holdings N.V. (NYSE:AER) stock closed at $44.87 per share. One-month return of AerCap Holdings N.V. (NYSE:AER) was -3.92% and its shares lost 16.01% of their value over the last 52 weeks. AerCap Holdings N.V. (NYSE:AER) has a market capitalization of $11.031 billion.

Here is what Askeladden Capital specifically said about AerCap Holdings N.V. (NYSE:AER) in its Q2 2022 investor letter:

“For now, in terms of taking “stock behavior” into account, I’ll provide one tangible example that is no longer in our portfolio largely for this reasons – AerCap Holdings N.V. (NYSE:AER). We initially invested in AerCap due to its historical business stability and very steady compounding of book value per share, driven by the capital allocation prowess of CEO Aengus Kelly.

Excluding transaction accounting related to the GECAS acquisition combined with recent markdowns due to expropriation of the company’s Russian assets (which we expect will eventually be recovered, at least in part, from insurance coverage), the company’s book value per share would have compounded at at least a 9% annual rate since the start of 2016, despite COVID.

But the stock price today is only up a paltry 12% total over that time period. This is primarily due to AerCap’s unfortunate habit of selling off viciously anytime there is macro threat – whether real or (more often) perceived. And while sentiment is quick to bail, it’s slow to recover. As shown in the chart below, there are four separate 35%+ drawdowns that AerCap has gone through since the start of 2016. All but one drawdown took no more than 5 weeks (one took about three months). In each case, it took the better part of a year for the stock to recover to previous levels…” (Click here to view full text)

Pixabay/Public Domain

AerCap Holdings N.V. (NYSE:AER) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held AerCap Holdings N.V. (NYSE:AER) at the end of the second quarter which was 40 in the previous quarter.

We discussed AerCap Holdings N.V. (NYSE:AER) in another article and shared Horos Asset Management’s views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.