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FLY Leasing Limited Message Board

  • tthemainman38 tthemainman38 Jul 13, 2013 7:47 AM Flag

    To Be Fair

    I, like some other longs, have expressed a lot of negative statements regarding the share offer. It's only natural after the share price gets trimmed for twenty per cent. It was particularly hurtful because the share price was showing strength prior to the offer. Mr Market indicated the value was $17.20 and yet the banksters set the price at $14. That really blows, we all agree.

    On the fairness side, Mr Barrington has demonstrated over the years that he can create value. Also, he has expressed on numerous occasions that before he deals he carefully examines all of the parts and will only do the deal if it enhances shareholder value, (no growth for the sake of growth) . Combining the expansion of the LOC, the share sale and the ample cash on hand tells us that an announcement of a substantial purchase is close at hand. In fairness, perhaps we should reserve judgment until all of the facts are in. Who knows, we may be presented with a great deal that is immediately accretive to earnings and by immediately accretive, would have to include the adjustment of the share count. Thus far, management has walked their talk so I remain confident.

    For what it's worth, in my opinion $14 was the bottom. Had the banksters set the offer at $15 or $16 that would have been the bottom. Perhaps I will be proven wrong, won't be the first time, because of the additional shares and shareholders, but that is my OPINION.

    Sentiment: Strong Buy

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    • Hi,

      If the company needed about 150 million for general airplane buys was it not smarter to upsize the main fly acquisition loan from the now 450 to 600 million if possible? From there recent developments they say that they have identified about 450 million of potential aircrafts so I don´t think a mayor deal like the GAAM is going to happen. They problebly just needed the extra cash + the extra 200 million from the main fly acquisition loan to finance the new deals.


    • I agree. As long as the money is used in a manner where the value created exceeds the dilution everyone will be happy. If the value created only equals the value lost by the dilution then its a neutral deal to existing shareholders, but gives us an opportunity to buy it at a reduced cost. Im personally using this as an opportunity to swap my remaining AYR shares for FLY. The worse case scenario is the money is used to pay down debt or increase their cash position for a "potential" deal in the future. In this case the cash or increased equity adds value to all shareholders and the dilutive affects of the secondary are largely mitigated.

      My only concern at this point is if they will cut or suspend the divi to help facilitate a deal in the works. If so, we may have another leg down, but I wonder how much of one considering sellers must be exhausted at this point.

    • I'm not sure why you think the CEO is such a strong capital allocator. The business is managed by Summit/BBAM (now owned partially by management and partially by Onyx). The CEO is largely a figurehead.

      Sure, the principals of Summit/BBAM/Onyx have an equity stake in FLY, but it's more like a cheap option than true equity risk. They also have a fat stream of management fee income to mitigate the equity risk.

      They made a couple good moves around the height of the financial meltdown. But the CEO's theory that share repurchases below BV would be bad for shareholders was just plain silly. A dilutive secondary was better than a decrease in liquidity? Come again?

      • 1 Reply to mastermind_not
      • Mastermind- To be fair. At the end of 07 there were 33,603,450 shares outstanding. Over the next several years management repurchased shares aggressively at a huge discount to book, average price $6 to $7 a share. When the share count was reduced to 25 million shares management became concerned over the lack of liquidity and discontinued repurchasing shares. Criticize management at will but let's not disregard the facts.

        Sentiment: Strong Buy

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