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Horos Asset Management, an asset management firm recently published its Q4 2020 Investor Letter – a copy of which can be downloaded here. A return of 26.3% was recorded by the fund for the Q4 of 2020, outperforming its benchmark index that delivered an 11.9% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Horos Asset Management said in its letter that they increased their stake in AerCap Holdings N.V. (NYSE: AER). AerCap Holdings N.V. is the largest aircraft leasing company in the world that currently has a $5.7 billion market cap. For the past 3 months, AER delivered a decent 27.23% return and settled at $44.47 per share at the closing of February 8th.
Here is what Horos Asset Management has to say about AerCap Holdings N.V. in their Q4 2020 investor letter:
"Regarding AerCap, we believe that the high uncertainty surrounding its aircraft leasing business has slowly begun to subside. On the one hand, the relatively greater global control over the pandemic and the work of airlines to increase flight safety to the best of their ability has allowed a gradual recovery in air traffic. Although, realistically, it is still far from desirable levels, the trend is positive. On the other hand, the eagerly awaited vaccines to combat COVID-19 may mark a definitive turning point for the airline industry, once the population begins to be immunized. While we are well aware that the scenario may change again (new, more contagious strains, less effective vaccines than expected or new lockdowns), we believe that AerCap's financial and liquidity risk has been drastically reduced.
In addition, the management team has demonstrated its ability to adapt to this environment by renegotiating with Airbus and Boeing a very significant delay in the purchase of new aircraft, thereby reducing its investment needs, as well as taking advantage of the easing of capital markets to refinance debt at lower rates. Finally, the company realized an impairment in the fleet value of just over $900 million last quarter, impacting the risks of expected cash flows for its older aircraft. After this impairment (the only and last one they expect to make), AerCap's NAV stands at 69 dollars per share at the end of the third quarter, 50% above its share price at the time of writing and despite having risen by 330% from the lows reached during the worst of the crisis."
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Video: Top 5 Stocks Among Hedge Funds
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