Tokyo Picker

On Whole Foods, McDonald's and New Banking Fears

Whole Foods up 20% since this article and that's before the buy-cott gets into full swing. Steinberg, don't let your weirdo politics get in the way of whatever brain you have, butthead.

Capitalism, Socialism and 10-Year Returns of Country ETFs

The basic flaw is linking the level of tax/regulation to the change in stock market valuation. The reason why India and China have done so well is that their tax and reulatory environments have been improving, even if they still have a long way to go. The reason why the advanced countries have had relatively little increase in market value is because they have had little (if any) improvement. Change correlates to change.

15 Stocks You May Want to Keep Out of Your Portfolio

Ford's main competitor is now the US government. Which would you bet on?

Ignore Detroit's Bondholders' Whines

I am looking at XGM - $25 GM senior note trading at $2.03, so you can buy $1,000 for $81.20. If the exchange goes through you get 225 shares in exchange.

Then you can buy a Sept $1 put for $0.55, making your shates worth $101.25.

I guess this shows the market thinks the exchange is not going through.

It's Time for the Fed to Get Serious - Barron's

The first thing to do is to allow a couple more A-list defaults to capture the value in synthetic CDOs largely owned by Equropean public sector investors. Once US FIs have harvested that, the Fed should recognize that there are a lot of bonds that are implicitly guaranteed by the US under the "too big to fail" doctrine and capture the value of the spreads on those bonds by buying them and selling equivalent maturity Treasuries. Otherwise investors are getting overpaid for US risk.

Treasury Bonds: The Short of the Century

This is good for the Obama trade.

1 Go long munis while they're cheap - Obama will give the cities and states grants and loans. Muni CEFs are even better as they're at a huge discount and bored investment bankers will have nothing better to do than turn them into mutual funds.

2 Go short the long bond. Someone's got to pay for this and, let's face it, the kids don't vote.

Aircastle In Fine Shape; Fears Appear Unfounded

All airplane operating leases are always denominated in dollars (with the exception of some esoteric tax products not relevant here). It doesn't really matter where the company is domiciled - Aircastle is in fact a Bermuda corporation.

One issue to be aware of is that most of these companes are PFICs, certainly AYR and AER. I believe GLS and FLY also.

Aircastle In Fine Shape; Fears Appear Unfounded

Should have said - last post was response to Alan - sorry

Aircastle In Fine Shape; Fears Appear Unfounded

In fact 86% of AYR's planes are new generation. If you bother to check the facts (easily available in the presentation to Credit Suisse mentioned in the article) your comments may become more illuminating.

I think you're misunderstanding the way this business works. As the fuel price goes up, the sufferers are not these guys, but the airlines who own older, less fuel efficient airplanes. Those older airplanes tend more to be owned by airlines. The newer airplanes are owned more by these lessors. When the pressure gets too much, the airlines go under. The shareholders/lenders of the airline are stuck with the old airplanes (as well as the legacy pension costs, etc). The lessors can easily get back their planes, even in the US (thanks to section 1110 of the bankruptcy code), and lease them to the younger, stronger airlines, thus creating a virtuous cycle.

Obviously there is a frictional cost to this repossession and releasing, which can be quite substantial - the planes may be idle for a few months, although that is not happening yet. That's why, if you look at the history of operating leasing in the last 20 years, operating lessors with short-term lease-specific debt and hair trigger covenants (e.g. GPA) go under, whereas operating lessors with higher credit and more stable sources of funding (e.eg. GECAS and ILFC) survive. Obviously the backing that GECAS and ILFC have is not as valuable anymore. But the trick in picking winners here remains looking closely at the terms of their debt . If they are stable on that, they will make a lot of money. Provided that they do not try to buy cheap by buying older generation aircraft - that is a quick and easy form of suicide these days.

Eye on Plane Leasing Sector

I think you're misunderstanding the way this business works. As the fuel price goes up, the sufferers are not these guys, but the airlines who own older, less fuel efficient airplanes. Those older airplanes tend more to be owned by airlines. The newer airplanes are owned more by these lessors. When the pressure gets too much, the airlines go under. The shareholders/lenders of the airline are stuck with the old airplanes (as well as the legacy pension costs, etc). The lessors can easily get back their planes, even in the US (thanks to section 1110 of the bankruptcy code), and lease them to the younger, stronger airlines, thus creating a virtuous cycle.

Obviously there is a frictional cost to this repossession and releasing, which can be quite substantial - the planes may be idle for a few months, although that is not happening yet. That's why, if you look at the history of operating leasing in the last 20 years, operating lessors with short-term lease-specific debt and hair trigger covenants (e.g. GPA) go under, whereas operating lessors with higher credit and more stable sources of funding (e.eg. GECAS and ILFC) survive. Obviously the backing that GECAS and ILFC have is not as valuable anymore. But the trick in picking winners here remains looking closely at the terms of their debt . If they are stable on that, they will make a lot of money. Provided that they do not try to buy cheap by buying older generation aircraft - that is a quick and easy form of suicide these days.


On Apr 17 01:02 PM DSX Lover wrote:

> These things have come down, because they are heavy leveraged and
> keep missing the numbers. AYR and GLS have missed earnings the last
> 2 quarters. I won't be surprised if GLS misses again next week. FLY
> is the worst, borrowing in excess of Free Cash Flow to pay for the
> dividend. AYR and GLS have paid huge dividends above EPS because
> they been able to utilize the large depreciation expense, and easily
> available Finance from commercial paper to finance a large percentage
> of the fleet. Now the Financing is not that easy, and creditors are
> requiring lower debts on Net Asset Value of the Planes, which will
> contract the Dividend. AYR had to cut the dividend over 50%, and
> I assume that GLS will do so in the near term as well. I would wait
> until GLS reports before jumping in, AYR is interesting in the $10-$11
> level with a 10% Dividend being supported by a dividend payout of
> 60% of EPS. Unlike the Shipping sector, where charterer's have to
> ship an excess of in demand for commodities, and Ship charter contracts
> are not dependent on fuel prices, the Air Leasing companies clients,
> are not as stable because the high fuel prices is putting bankruptcy
> pressure is smaller unprofitable airlines, making the business more
> risky, despite long-term leasing agreements with the airlines.