Tuesday, April 15, 2008

Genesis Lease - Lets repeat Aircastle's story

Genesis Lease was formed in 2006 after acquiring 41 plane from GE affiliate, and has so far expanded its portfolio to 53 planes. Fleet is even newer than Aircastle's (6 years average age), customers are airlines outside NA (which only accounts for 15% of revenues), only 5 leases are coming up for renegotiation in 08-08, and distributable cash flow is $2 per share. Current stock price? $11, implying 20+% yield. Only recently it has been trading in mid 20s. The only culprit here is investor panick, as U.S. recession is inducing fears that global recession is imminent, which will bring about collapse of all airlines and with them - the lessors. This negative outlook brings you an opportunity to buy the stock that I expect to generate 100% return over the next two years. I don't like the taste of my own words so lets hope I don't have to eat them.

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