In this article, we look at the Top 5 Stock Picks of Naval Khera’s Brightline Capital. If you want to read our detailed analysis of the Mr. Khera’s portfolio, take a look at Top 10 Stock Picks of Naval Khera’s Brightline Capital.
5. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)
Mr. Khera’s Stake Value: $13.6 million
Percentage of Mr. Khera’s 13F Portfolio: 9.16%
Number of Hedge Fund Holders: 26
Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is an American company headquartered in Purchase, New York and founded in 1992. It primarily offers outsourced aircraft and other aviation operating services. In addition to providing aircraft, it also provides other services such as crew, maintenance and service.
In its third quarter 2021 earnings report, Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) revealed that it had earned $1.02 billion in revenue and $4.88 in non-GAAP EPS, beating analyst estimates on both counts. Stiffel set the company’s share price target to $90 as it resumed coverage in June 2021.
Mr. Khera’s Brightline Capital held 200,000 shares of Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) during the second quarter of this year, in a stake that equaled $13.6 million and represented 9.16% of the overall portfolio. During the same time, 26 of the 873 hedge funds polled by Insider Monkey had holdings in the company.
Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)’s largest shareholder is David Einhorn’s Greenlight Capital who owns $103 million of equity through 1.5 million shares.
In a second quarter 2021 letter, Greenlight Capital had the following to say about Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW):
Air Freight
COVID caused a dramatic reduction in passenger aviation. Passenger planes often carry freight in their bellies. With planes grounded, capacity came out of the industry. At the same time, freight demand expanded both due to the recovering economy and growing ecommerce, which often emphasizes air shipments. While there has been some recovery in passenger aviation, airlines are emphasizing narrow-body planes, which carry less freight than wide-body planes. Compared to 2019, current air freight demand is about 10% higher and capacity is about 10% lower. The result is that cargo rates have exploded.
Supply will be slow to come on-line. Some passenger planes are being converted to freighters, but conversion capacity for wide-bodies is limited and the aggregate impact of this will be modest. Meanwhile, air freight companies trade at tiny multiples of what investors assume to be peak profits. The implied cost of equity is quite high, which makes it difficult to justify adding assets. As a result, air freight companies are in no rush to order new planes, and in any case, new orders would take several years to build. The result is rates and profits are likely to be higher than expected for quite some time.
We own Atlas Air Worldwide (AAWW), which is poised to benefit. It trades at around 5x this year’s consensus earnings estimates.”
