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Aircastle LTD Message Board

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  • warlord_shea warlord_shea May 29, 2008 1:19 PM Flag

    Investor Lawsuite Coming ...

    Suing a company never helps that company. It diverts resources to the lawsuit.

    Keep in mind AYRs business model is like a REIT, and that's the template they have chosen. You're advocating for a strategy that is close to a growth strategy. That's not the model this matches... there are plenty of growth stocks out there that give no dividend and instead re-invest the money each quarter into a variety of things. Sometimes that "thing" includes a stock buyback.

    There is plenty of down and up left before we're out of the dark part of this. I'd recommend toughing it out or getting out, but not a lawsuit.


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    • I think the low stock price of AYR,as compared to its peers has more to be with its huge debt load,not the payout.
      Institutions could not care less whether they pay a dividend or they hold on to it for expansion.

      • 1 Reply to janetinrichmond
      • REITs and REIT style companies tend to carry debt more heavily as it is a part of how the model works. Out of curiosity I went ahead and compiled the debt numbers for "the big four" in this sector:

        Debt Assets Debt%
        AER 3.6b 4.6b 78
        AYR 3.3b 4.5b 73
        FLY 1.4b 1.9b 73
        GLS 1.1b 1.6b 68

        Given the model and sector I think the debt is in line. Though 3.3b sounds like a lot of money, as a percentage it is where it should be compared to competitors. If all assets were sold outright even at a discount due to on-the-book depreciation, there would be a book value of 1.1b over 73m shares meaning $16 to $26 (see Goldman Sachs recent valuation for AYR) outlay.

        So the numbers look big to us but not in context. A leading fortune 500 company has 135 billion in liabilities. They also have 123 in equity and are trading like gangbusters. See XOM :) You can have great debt and still maintain great value in the marketplace.

        At any rate, it was a good thought exercise.

        Upgrading position from buy to strong buy pending announcement in 2 weeks. Moved from adding 13% to adding 35% at today's low. Dollar costed to about $17.00.

        Cheers all,


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