FLY can't be sold without a buy-out and termination of the BBAM management contract. It's conceivable, but I don't see it happening because BBAM is fat and happy with its FLY arrangement. Why let someone else buy your cash cow without a huge premium?
Revisiting this old thread. Man, I looked up and AER has been absolutely *hammered* the last couple months. It used to be the largest position in my portfolio. Then it tanked 50%. Ouch!
FLY hasn't run up; but it hasn't fallen hard like its industry peers. It has just bumped along (and keeps bumping along).
No doubt. Horrific timing. We'll learn more about those investments with the 2015 financials. I'm hoping that they hedged the production in some way to limit the downsize risk. But we'll see...
main, I was saying that FLY may have outperformed AL (Air Leasing) over the past three years from a total return perspective. (Not AYR, AL ... I don't think that AL pays dividends, but I'm not sure.)
Yes, mainman, ha. I've been complained about outsourced management for a long time.
The point is that FLY has always suffered from a bigger market discount (discount to book) than its peers. Sure, BBAM has made some good decisions along the way, thus driving good but lumpy shareholder returns in some periods. But the market has never been persuaded that the outsourced management model is good for shareholders. Otherwise, FLY's competitors would not trade at such a premium to FLY (whether measured by BV, P/E, etc.).
All that said, I just posted relative performance numbers, and FLY has performed "better" in the last 12 months because the others had farther to fall. All the aircraft lessors are getting punished along with the banks and other financials generally. So 2016 should be interesting.
Interesting. I'm doing some graphing on Morningstar's website.
Last 1 month ... FLY down 13%, AYR down 19.5%, AL down 26%, AER down 30%
Last 3 months ... FLY down 12.6%, AYR down 22.6%, AER down 23.7%, AL down 23.8%
Last 12 months ... FLY down 14.9%, AYR down 12.7%, AER down 22%, AL down 25%
However, over last two and three years, FLY has underperformed:
Last 3 years ... FLY down 9.1%, AL up 10.3%, AYR up 41%, AER up 117%
Of course, including dividends for a "total return" perspective, FLY was likely in positive territory and might have outperformed AL; I don't have time to do the math.
Amen to that. Unfortunately, management owns a big chunk of the company and has an outsize influence on the Board of Directors. So the former seems unlikely, and the latter seems even more unlikely. But one can hope...
Interesting day. Despite the market bloodbath, LUK is up on 3x normal volume. I don't have time to check other financials, but GS is down a percent or two (after earnings).
Hopefully the timing is better on the $25m stock repurchase. And hopefully they bump up the repurchase amount and buy more at these levels...
Nice use of capital. Buy at $13.95 in a tender awful. Stock now down in the low $11s.
Obviously, the market overall has sold off; and financials have been hard hit, including the other aircraft lessors. But the outsourced management team has consistently failed to add value through its "financial engineering" solutions. How about: internalize the management team so they become fully aligned with FLY shareholders? And end the conflict of interest with BBAM seeking to maximize BBAM origination fees (transaction fees)? How does the FLY board of directors justify this prolonged underperformance and capital allocation weakness?
I haven't had time to focus on Golden Queen itself -- the OTC listed company. Do those shares have potential significant upside? My understanding is that LUK is providing some kind of priority financing, so the publicly floated shares are probably way subordinated in the cap structure. Economically, probably a cheap option and fairly levered to the price of gold.
Anybody looked at this?
I still think it's revisionist history. Go read the old transcripts. Barrington used to complain about the huge discount to book value; but they refused to repurchase shares in the $11/12/13 range because it would diminish the float too much.
Sure, BBAM was opportunistic during the worst of the financial crisis. But the outsourced management model is the problem here, not Onex per se. Look at the competitors; do any of them have an outsourced management team?
Thanks for the head's up. As usual, pretty fluffy, but interesting historical framework/lens to keep current market events in context. I wouldn't say "brain dead" by any means.
Amen to that. The market obviously does not believe in Team Handler's capital allocation skills. They need to focus on improving the JEF business and using excess cash to repurchase shares.
The management structure has not changed over the years. BBAM has always been the "outsourced" management team; and the individual players at BBAM have not changed (Zissis, Barrington, etc.).
Remember that the outsourced CEO, Barrington, argued that he could not repurchase shares in the $11/12/13 range because it would diminish the public float too much. So I think you guys are engaged in some revisionist history. Sure, BBAM pulled the trigger on some no-brainer moves during the financial crisis. But they haven't been great since before Onex came on the scene.
Ultimately, the market doesn't like the outsourced management model. It will take a shake up of the Board of Directors to change that model. For now, BBAM and Onex (as a passive investor in BBAM) are incentivized to generate transactions and transaction fees over creation of FLY shareholder value.
Yes, in at least a couple instances, FLY announced that it was terminating the dividend (and effectively accelerating return of capital to shareholders through the tender and market stock repurchases).
- Energy Transfer Equity, Energy Transfer Partners and BG Group say they have received approval from the FERC to site, construct and operate a planned natural gas liquefaction and export facility in Lake Charles, La.
- The Lake Charles LNG project would be one of the largest LNG export initiatives in the U.S.; if built to full capacity, it would be capable of exporting as much as 2B cf/day of natural gas per day, or ~15M tons/year of liquefied natural gas.
- Energy Transfer will provide pipeline services to the plant, while partner BG will build the facility and handle the gas it liquefies.
- The companies expect to make a final investment decision in 2016, but a final go-ahead is far from certain given the glut of LNG export capacity due to come online and low prices eating into margins the projects were expected to capture.
Hopefully $14.25 ... I bought some trading shares last week and tendered at the max tender price...
Big picture: (1) I believe that LUK has been currently expensing its pursuit costs for Oregon LNG, but agree that yes, seems like abandonment will be inevitable given the energy markets; (2) not sure about the hedge funds, but in October (investor call) they were doing okay; (3) JEF has always been levered to energy, but I believe Handler mentioned that the worst days have already run through the P&L (but you never know until you see the numbers).