Leasing the Sky: AER – QAV America #30

In this episode of QAV America, Cameron and Tony take a tour through the strange split-brain mood of the US markets, where weak economic data is somehow bullish because investors are convinced the Fed will cut rates in December. They break down the odd macro setup, check in on the portfolio, and walk through fresh results from star performer **Willis Lease Finance (WLFC)** and a big buyback from **Enova (ENVA)**. From there, Cameron recaps the performance of the 27 US stocks they’ve analysed this year, before diving into a full deep-dive on **AerCap (AER)** — the world’s largest aircraft lessor. The conversation covers why airlines lease instead of own, how aircraft leasing actually works, why Ireland is the global nexus for the industry, the wild origin story of Guinness Peat Aviation, and the massive headache AerCap faced when Russia and Ukraine seized more than 150 of its aircraft in 2022. They wrap with QAV scoring, book-value checks, revenue and profit trends, and a broader conversation about how the leasing model fits into cyclical markets, AI, mobility, and long-term capital allocation. Everything from the Fed to kung-fu neural adaptation shows up along the way.

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00:00 – Market mood & macro split-brain (no tickers)

02:00 – Portfolio news: Willis Lease Finance (WLFC)

03:40 – Enova International (ENVA) buyback

04:30 – Portfolio performance overview

06:00 – Recap of stocks covered this year

08:00 – Deep dive introduction: AerCap (AER)

40:00 – Final wrap & philosophical detour (AI, kung-fu, skills vs computation)

Cameron: [00:00:00] Welcome back to QAV America, Tony, episode 30. It’s the 2nd of December, 2025. How you doing?

Tony Kynaston: Good summer in Australia. I’m

Cameron: Summer in Australia? Uh, not in the United States though, and it’s the overall mood in the US markets. Tony, kind of weird, uh, to say the least bit of a split personality over there at the moment. I think on one side, investors seem to be getting increasingly confident that the Fed will cut rates in December.

I think the future markets have the odds sitting at roughly 85%. Now, which is high enough that everyone’s basically planning their Christmas shopping around it. But the flip side is that the economic data, backing that up. It isn’t pretty. Um, you know, I know that there was sort of a break in gathering data while the government was shut down for a while.

But manufacturing continues to slump. Inflation and [00:01:00] income growth are cooling off broad GDP expectations for next year of drifted down toward the 2% mark. So it’s sort of a bit of a soft landing fantasy mixed with a little fear that maybe things are wobbly over there.

The market o.

Tony Kynaston: cuts. That’s the looking The things are looking wobbly.

We go through the looking glass like 10 years ago, 20 years ago. Those kinds of numbers were out and about. The market would be tanking. it’s doom and gloom. The economy’s busted. The inflation’s coming down and exports are going down. it’s like yippee. The fed’s gonna cut. We can Yeah. or Yeah. But it’s the, it’s the double-edged sword, right. Um. Yeah, the market’s not doing well, so interest rates are gonna get cut, but the market’s not doing the, the economy’s not doing great.

Cameron: Hmm. put

Tony Kynaston: called, people

Cameron: And as we’ve talked about over the last year on this show, we know that most of the [00:02:00] returns in the Dow Jones are coming from six stocks or seven stocks.

Um, so it’s very uneven. That said. Yeah, things are doing okay from our portfolio perspective, but, um, the market opened pretty strongly last week, but then by the beginning of this week, it seemed to have cooled off again. Crypto’s having one of its spasms, bond yields have jumped in terms of our portfolio specific stories though, Tony, some good news.

Uh, Willis Lease Finance Company, WL. FC, which has been the rockstar in our portfolio, our US portfolio over the last couple of years. Um, it’s up 152% since we added it, but it was up at one point about over 300%. But they came out with their results this week. Uh, revenue came, [00:03:00] this is for the third quarter.

Revenue came in at $183 million, which is up 25% year on year. Pre-tax income grew by the same percentage utilization of their engine and aircraft portfolio. So they lease out engines, mostly few aircraft, but mostly engines, uh, was up 86%. They lifted their dividend from 25 cents to 40 cents. They did note that margins of.

Tightened a little, but overall, very solid results from them. And how did their shares do as a result? Uh, nothing much happened. Uh, just it went down. Um, so there you go.

Great news. Let’s sell, as you know.

Tony Kynaston: money. Let’s sell. want some more loss making companies to invest in?

Cameron: Yeah. What, but what’s their AI story? That’s what we wanna know. Um,

only other stock in our portfolio that had, [00:04:00] yeah, the only other stock in our portfolio that had any news that I could see was in Nova ENVA. They just announced a $400 million buyback, which we like to see. That’s all of the market news that I’ve got though this week, Tony.

I’ve got, uh, I thought I’d just do a portfolio update while I’m at it though, uh, I’ll talk about some of the companies that we’ve talked about in recent weeks. So, the dummy portfolio that we run in the us uh, since I started it in late 22, September, no, sorry, 23. September, 2023 is up 53.3%. Uh, no, sorry, up 53.04% versus the s and p 500, up 53.3%, so we’re now returning.

Pretty much exactly the same as the s and p 500. We’ve come from doing triple the s and p 500. At the end of last year, we were up 90% versus [00:05:00] 30%. We are back down this year to sort of neck and neck with the s and p. So it’s not been a good year for the stocks in our portfolio. They’ve all. Had fairly average years at least versus the index.

But, you know, looking for it, looking at it over the long haul, I’m pretty happy with 53% return over a little over two years. Although if you could just buy an ETF and do the same, um, that’s, you know, be a lot easier to do that in some ways. But I do know that we will get back to our performance if history is any guide over the next couple of years,

Tony Kynaston: case in Australia and

for me over 30 Yeah.

Yep.

Cameron: And the, and the case from what we’ve learned from Buffet and Munger and all those guys over the years as well. For the month, uh, our US portfolio is down 3% versus the s and p, which is pretty much neutral for the last 30 days. Uh, of the companies that we’ve covered on the [00:06:00] show over the last six or seven months, there’s been some really great results there.

I wish I had owned, uh, all of these stocks. I had the opportunity to put ’em in our portfolio. Remember Topgolf, Callaway we talked about a few weeks ago, we talked, we, we talked about them at the beginning of November’s 12th of November. They’re up 17% since then. There was up 20%. They’re down 4% today. So that was pretty good.

I thought you’d like that. Um, community health systems are up 20% since we talked about ’em in October. Uh, lots of other great results in there too. Zep the. Chinese watch company is up 800% since we covered ’em in July. That’s still the highlight. Um, so out of, out of all of the stocks that we’ve covered, which is 27 on the show, I’ve done a deep dive on this year.

21 are up, six are not, six are down. [00:07:00] Um, the average growth out of all of them is about 43%, but it’s a 78% win loss ratio at the moment, so that’s pretty good.

Tony Kynaston: kind of randomly too, aren’t you? From the

Cameron: They’re on the buy list. But yeah, there’s usually about a hundred stocks on the buy list, and I don’t go from the top of the list as I normally would if I was getting add into portfolio. I select them based on them being a good story to talk about something interesting. And I have another interesting one this week, Tony.

Tony Kynaston: uh,

Cameron: I think you’ll find it interesting. No, but a company very similarly similar to WLFC, funnily enough, they’re called. Air cap.

A-E-R-A-E-R is the ticket code for air cap. Air cap owns and leases out commercial aircraft, passenger jets, cargo planes, aircraft engines in helicopters. They don’t fly them. They rent them long term to airlines and other [00:08:00] operators similar to Willis Lease, but Air capa the.

Um, the, the Walmart in this space, they’re the Costco, uh, WLFC are more of a, a family owned, uh, corner store. Uh, these guys are the giant supermarket of aircraft leasing. They will buy jets, lease them for eight to 12 years per contract. They manage a massive fleet. And then they do lease buybacks and sell them and juggle it.

Assets. They also do engines, but they’re sort of a side quest for them. Willis Lease is a specialist boutique firm that focuses on engines, air cap, do everything.

Um,

Tony Kynaston: of way most operate these days, they would rather lease their planes than, than buy. Them outright. Better use of capital to lease.

Cameron: don’t. ruin my narrative here. Tony. You’re [00:09:00] jumping ahead. You’re doing, you’re doing what Ray does. Cutting to the cutting. You, you, you’re doing the Reader’s Digest version of my very long story here, but yes, you’re right.

Tony Kynaston: don’t wanna do what Ray does. I’m not gonna sit here, eat gummies when, when you.

Cameron: Maybe you should. Uh, he apparently thinks it’s the best way to get through an hour with me is just to eat gummies. Um, yeah. Like, and that surprises me ’cause I, I know nothing about. Uh, these businesses, and we’ve talked about a number of companies that lease the shovels and, uh, what do you call it, the

 picks and shovels.

Yeah. Yeah. Uh, I think we talked about, well, we talked about D aos a long time ago. It was one of the first companies that we did a pulled pork on. They lease out container ships. Uh, we talked about IHSA while back. They do the mobile phone towers in Africa, in the Middle East. They just run the [00:10:00] infrastructure and let other people do the customer management and the retail side of it.

So it, it seems to be common across a lot of industries these days. I think we also did a, a, a, a mining company. Somebody like Titan, was it not Titan Machinery? Somebody like that. I can’t remember. Precision, precision drilling. Maybe somebody who was leasing out like oil rigs or something like that.

Tony Kynaston: self, self-directing oil rigs that could move around. But, um,

Cameron: up and, yeah, walk and then sit back down again and drop a,

hmm.

Tony Kynaston: the it’s been a thing where, I guess with the rise of the focus on return on equity as a metric in companies, um, companies. Just tried to offload assets. You are better off, uh, leasing the supermarket than owning the building. Um, ’cause you

Cameron: Mm-hmm.

Tony Kynaston: use

the, freed up capital to, uh, invest in having, 20 supermarkets that you, you know, it’s for the same cost of owning one, you could lease 20. [00:11:00] So you kind of got economies of scale, but it was also a better return on equity. so you see it in almost every industry. Um, truck trucks. Uh, cars, anyone with a big car fleet will lease them.

Cameron: Mm-hmm.

Tony Kynaston: these days. Not, not many that I can think of own their own property. Um, some do, but, um. generally, you know, owner, founder, hyper lead, places that can, stand up to Wall Street when they say, Hey, your RR e’s no good, you’re better off leasing.

Um,

Cameron: Mm-hmm.

Tony Kynaston: industries across the board will lease things including the airline industry.

Cameron: Hmm. Well, it turns out, uh, as. Mm far, as I could find out with my research, about 50% of all commercial aircraft flying today at least. And that includes the really big players like Emirates or Delta, Qantas, United through to ultra low cost carriers like Ryanair, [00:12:00] which was founded by the same guy who founded the company that AirCap came out of.

Uh, interestingly enough, and there’s a good story behind that. Yeah. Well, it’s a great story too. Yeah. Uh, didn’t work out well, but, um, yeah, I think that was, he, he saw an opportunity in both cases. So, uh, why do airlines lease aircraft for people? Like me who don’t really understand this building on the story that you’ve already told.

A new single aisle, Airbus A three 20 Neo costs around 110 million US list price. A Boeing 7, 8, 7 Dreamliner costs around 300 million us. So these are massive multi-decade commitments. Most airlines don’t have that kind of balance sheet strength, which surprised me a little bit I thought. Airlines, you know, based on Qantas, make money, hand over fist.

Apparently [00:13:00] not the case. Uh, airlines is a very low margin, highly regulated, vulnerable to shocks. We talked about a a l on the show not that long ago, by the way. It’s up 1% since we talked about it, by the way, PGE PG and EPCG that everyone on Reddit hated. It’s up 1% since we talked about it. So that’s doing okay.

Career Electric power’s up 3% since last week. Um, so yes, leasing protects airlines from bad years. Airlines are cyclical, as we know. Again, we talked about that on the a a l show, recessions, fuel, price spikes, terrorism, pandemics. The industry just gets hammered repeatedly. It’s par for the course. Getting back to golf analogies, owning billions in aircraft can create a downturn that can kill an airline.

So Elise converts that into a predictable monthly rent. For them, at least. Aircraft can be returned at the end of the term or swapped for a more efficient model, or they can up or downsize based on demand. [00:14:00] Most of the time what happens is the airline takes delivery of what’s called a white tail. It’s an unpainted or neutral painted aircraft.

They handle the paint and interior work. The airline does, not the, not the lessor, not the air cap, and I looked into this. It only takes a few weeks, all going well for them to do a complete refit and paint job of a plane. You know, the airline will have crews, I guess the companies probably they outsource this too, as well, that do it for them.

But they, they’ll repaint it, swap seats or cover seats. Choose the entertainment system, add the branding, change the carpets, change the galley equipment. Uh. But it, it gets delivered, ready to fly, but they just do the fit out and make it look like a Qantas plane or a Delta plane or whatever it is. So leasing helps airlines expand fast.

Uh, apparently Airbus and Boeing backlogs today stretch well into the [00:15:00] 2030s, so you can’t get yourself a quick plane, um, unless you’re. The president of the United States and then you just reach out to Cartera, I guess, to get one for you. Um, leasing helps smooth their balance sheets, as you said before, and, uh, you know, when you own a jet, you own it’s fate you’ve gotta deal with.

Engine value decay technology, obsolescence, regulatory changes, fuel efficiency standards, geopolitical shocks, one of which we’re gonna talk about in a minute. So, all of these things are handled by the lessors in this case. They deal with all of those sorts of problems. They own the underlying asset and the airline just leases it out.

Why Ireland? And this is a part Irish part Netherland story, Netherland story. It’s. Interesting. So Ireland is to aircraft leasing. What Switzerland is to banking, as we know from all the software firms, uh, in Australia, all the big IT [00:16:00] companies that seem to have their headquarters in Ireland, uh, it’s a favorable tax regime.

Yeah. Deep financial structuring expertise. Got a treaty network that avoids double taxation and the founder of the company that came before AirCap. Was Irish. It’s originally an Irish company, as you might guess from the name, a ER, AirCap, AirCap, to be sure. To be sure.

But

Tony Kynaston: is

Cameron: yes,

Tony Kynaston: Yeah. Yeah. Not to be confused with the other Lingus.

Cameron: Uh, this is, uh, but they’re also listed in the Netherlands. Uh, the business is Irish. The legal entity ended up Dutch. For structural tax and regulatory reasons. Turns out the Netherlands is extremely friendly for multinational finance companies, so

air cap’s, head offices in Dublin, not in Amsterdam. Yes, you did.

So the bottom line is airline lease, uh, airlines lease aircraft [00:17:00] because ownership sucks. It’s heavy, it’s rigid, it’s expensive and deadly. And downturns leasing lets them grow, shrink, modernize, hedge risk and avoid catastrophic balance sheet stress.

 So the, the.

Tony Kynaston: lot Like it’s a, a proportion of the cost. You, you buy one plane, you, you’ve got one plane, you lease, you can lease 10

same

Cameron: and you can scale up or shrink relatively quickly. AirCap traces its roots to one of the pioneers of aircraft leasing a company called Guinness, Pete Aviation,

GPA. Yes. It was founded in 1975 in Ireland by Tony Ryan. The Irish businessman who later co-founded Ryanair in 1984, so his story is he worked for Air Lingus was a station manager, eventually ended up being the [00:18:00] station manager at JFK Airport in 1968.

Returned to Ireland in the early seventies where he moved into aircraft leasing. Apparently Air Lingus had a lot of surplus aircraft flying around during downturns. And so he came up with this idea. He got financial support from Air Lingus and the Guinness Pete Group, and then founded Guinness. Pete Aviation raised $5,000 for his 10% stake and Guinness Pete Group was basically an investment holding company with interests in Europe, Australia, and New Zealand, where it was acquired.

In 1990 by Reley Investments

means nothing to Americans, but very, very famous corporate Raider, New Zealand corporate Raider, All Ords. Very, very active in Australia. Ron Brey in the eighties [00:19:00] and nineties. Very, very famous New Zealand corporate raid. I think Gordon Gecko. But says fish and chops. Um, you’ve been following what happened to Ron Brearley Tony Later in life.

Tony Kynaston: rum

Cameron: He was so well f.

Tony Kynaston: been Yeah, he was stripped of that. Yes, he was stripped of his knighthood when he was convicted of multiple counts of possessing child abuse material. Had his knighthood removed, served a reduced custodial sentence due to health issues. But in March of this year, he faced new charges, got arrested again in Sydney, and uh, I think that’s still going to the courts.

Cameron: He’s quite old now. He is in his late eighties I think. Anyway. GPA grew to become the world’s biggest aircraft. Lesser was based in Shannon Ireland during the 1980s. It became the world’s largest aircraft, lesser expanded its shareholder base to include [00:20:00] Air Canada General Electric, short term credit, bank of Japan companies in the Mitsubishi group.

It had financing joint ventures with. Airbus FKA McDonald Douglas At its peak, GPA was worth around 4 billion US dollars. But then they tried to IPO in 1992 just after Gulf War happened and there was a major aviation downturn, and it’s a bit of a. Convoluted story, the the float wasn’t underwritten and for some reason, but international financial institutions basically refused to buy shares.

They were unable to raise the capital that they needed, and then the company plunged into crisis with roughly 10 billion US dollars in debt. And it got, uh, reorganized. Went through a series of takeovers and restructurings through the 1990s and two thousands, and then was renamed [00:21:00] air cap and went public in 2006.

In 2014, it acquired the International Lease Finance Corporation, ILFC. From A IG, which vaulted it into becoming the largest aircraft, lesser by fleet value. Then in 2021, they pulled off an even bigger takeover. They acquired GE Capital Aviation Services, G-E-C-A-S G’s, aircraft leasing arm for more than 30 billion US dollars in total consideration.

That made them the dominant global player in aviation leasing. And today they are massive. They’ve got roughly 1700 aircraft, over 1200 engines, more than 300 helicopters, plus above a bunch of other things, private jets, et cetera, et cetera. Um, and that was all going great until [00:22:00] the Russian invasion of Ukraine in 2022.

Caused them a massive headache. They, along with other lessors, had dozens of aircraft physically inside of Russia and Ukraine. When the invasion started, sanctions kicked in in February. The EU gave them basically a month to get all of their aircraft out of Russia. And Russia said, uh, no.

And, you know, they couldn’t literally go into Russia, uh, and repossess their aircraft safely unless you wanted to find yourself with, uh, iridium poisoning or whatever it is that happens to people that Russians don’t like. So yeah, they lost and they couldn’t go to Ukraine either because it was in the middle of a war.

Um, crews wouldn’t fly them out either because they would probably get shot trying to, trying to leave or [00:23:00] lesser things like losing licenses or worse. So yeah, unless they were willing to storm the airports, they couldn’t get their planes back. Russia then created some fast track laws to transfer, transfer Western leased aircraft.

From Bermuda slash Ireland registration to ru, the Russian Aviation Registry, they were re-registered domestically. Russia treated them as Russian assets making repossession difficult. So, uh, the, the lessors, a number of them that lost planes being led by AirCap, which were the lead claimant in this filed insurance claims.

For somewhere between 10 to 15 US billion in war risk and confiscation insurance. The insurers mostly Lloyd’s, A IG, Swiss Re and others said Nah, the jets weren’t technically seized, that they [00:24:00] were just not returned.

 So AirCap and the others sued their insurers. And this went to the courts, and basically the courts found for the lessors. So, uh, judge ruled that the insurance company, the London London’s High Court, June, 2025, London’s high court, ruled that AirCap can recover more than 1 billion US dollars from its insurers in relation to almost 150 jets stuck in Russia since the invasion.

They also managed to get money along the way, um, but it hurt them. So at the beginning of the invasion, air cap had around 152 aircraft, valued around two and a half billion in Russia and Ukraine. In May 22, the company reported a net loss of around $2 billion due to the seizure. Uh, wrote off or impaired about 3.16 [00:25:00] billion of assets in relation to the situation, but some recoveries were made and September, 2023 in agreement was reached with alo.

Regarding a compensation package for 17 aircraft stranded in Russia, they got about 645 million in exchange for the aircraft that Alo owned. They got some cash settlements in December, 2023 that had been formally leased to S seven and Euro Airlines for about 572 million. And then the high court said they could get another billion from their insurance company, so they were able to recover quite a bit of money, uh, as a result of that.

But this seems to have negatively impacted the way the market assesses AirCap. From our perspective though. They’ve got predictable cash generation. They’re sitting on a deep free cash flow engine, leasing revenue from hundreds of aircraft to airlines globally. They’re [00:26:00] generating a ton of cash, and they’ve got this massive scale, which is effectively a moat.

They’ve got this huge competitive advantage based on their scale. They own thousands of aircraft, thousands of engines, hundreds and hundreds of helicopters, so they get good deals. They’ve got this niche that they pretty much dominate. But it seems the best I can tell, it seems the markets are treating this as like a cyclical company because we know that airlines are cyclical and airlines are their customers.

So therefore this should be cyclical. But I don’t think it is, you know, they, they’re locked into long-term contracts unless the airlines all go broke. And can’t or refuse to pay the leases that they have, AirCap get their money, whether the airline’s flying the planes or isn’t flying the planes. It has long term income agreements, but for whatever reason it’s showing up as really cheap in our, in our buy list.

So I’ll run through some of the num.

Tony Kynaston: [00:27:00] if, if you can have a war and the assets are seized and you can’t get access to them.

Cameron: Sure. But. You know, how many, how many wars have we had where they’ve lost access to their planes? I mean, you know, maybe we’ll have more wars. Maybe the US and China will go to a war maybe, or maybe they’ve got planes in Venezuela.

They should be getting their planes out of Venezuela now. Yeah.

 But you know, that’s fine then the market can predict the future, but we don’t predict the future.

So, um,

Tony Kynaston: the, uh, the company will be very careful about the worthing of their contracts to countries from now on too. And pricing, I would’ve thought.

Cameron: And also the insurance companies have, you know, maybe learn that they can’t get away with saying, no, you didn’t lose it, you just haven’t got it back.

Tony Kynaston: Yeah.

Cameron: [00:28:00] Uh, let me run through the numbers for it. So the closing price when I checked yesterday was $134. By the way. It’s ha it’s been on a great run. If you look at it, it was. Um, a year ago or two years ago, I was trading around 65 bucks. It’s doubled in the last couple of years, so it’s been on a tear. It was about a hundred bucks, so a bit less, maybe 90 bucks at the beginning of this year.

So it’s been up about 30% this year. So, um, as opposed to some of the stocks that I’ve talked about recently that have been in decline, uh, this one is already doing really, really well, but still from our perspective, looks really, really cheap on the fundamentals. Uh, so yeah, share price is about 134 bucks.

Um, EPS is $9 62. [00:29:00] Uh, the forecast EPS is $14 79. That’s the EPS for next year. So the forecast is that it’s. Gonna have a very strong year. PE is about 13.83, so not insanely high. Operating cash flow is around about five and a half billion. Free cash flow is negative 163 million. There, you know, a lot of, uh, capital expenditures, purchase maintenance, leasing overheads.

They’re investing heavily in fleets and assets, that kind of stuff. The book Value per Share, the latest is about $109. So the share price is 134. The book value is about 109 bucks. So, um, you know, it’s not less than book, but it’s not that much over book. So, um. I run through [00:30:00] some of the major scoring points for us.

Uh, let me skim down to my scoring panel. So it is a QAV score of 0.18. Not at the top of the list, like KEP was last week, but it’s still a good QAV score. Average daily trade’s about 200 million. So big enough for most people, the price to operate in cash flow is 4.15. So, you know, very, very reasonable from our perspective.

Uh, stock edia wise, quality rank is 63, so we give it a point for that. The stock rank is 89. We only scored if it’s 90, so it didn’t get a score for that, but it was very, very close. It’s F score is eight, which I think. KEP was an eight last week too, so very, very good. Financial health score, PETROVSKY score.

So we give it a score for that. The, our IV number one is only $49. Again, the price is 134, so I didn’t score it [00:31:00] for IV one, but IV two is $149, so it’s lower than our IV number two. Got a point for that. Um. The price is less than Book plus 30. It’s not less than book, as I said, but it’s less than Book plus 30.

So I’ve got a point for that. It doesn’t have a new point, new three point upturn because it’s been, um, going great guns, as I said, share price wise for the last couple of years. But the book value growth is positive. Let me just take you through their numbers here. Um. Air caps holding nv. Uh, total revenue in 2019 was 4.7 billion. Dropped a little bit in 2020 for obvious reasons. 2021 it was 5.1 20 22, 6 0.7 8, 20 23, 7 0.0 9, 20 24. 7.34. [00:32:00] Trailing 12 months is 7.5. The estimate for 2025 is 8.28 billion, which is also the estimate for next year, but it’s got a, a CAGR from a revenue perspective of about 9.12%.

So, you know, doing really well. Profit in 2019 was 2.447 billion. The TTM is $5.39 billion. That’s operating profit net. Profit is uh, TTM at $3.789 billion. So, uh, yeah. Healthy, very healthy company. Got a lot of debt, $42 billion in debt, but that’s what you’d expect. Net fixed assets is $70 billion, which is why it’s, uh, got a positive book value.

Uh, back to my notes, uh, my [00:33:00] scoring, uh, PE is not less than the yield. Yield is greater than the bank debt. Uh, the forecast IV is not greater than twice the price. All up, it got nine out of 12, uh, 75% quality score, and as I said, QAV score of 0.18. So, uh, yeah, I like it. I like it a lot, Tony. Very cheap, stable, generating a ton of cash.

I dunno why the market doesn’t like it, but that’s the market’s problem, not mine.

Tony Kynaston: it looks, looks exactly like a value stock should look. It’s like an infrastructure stock almost. They, they Yeah,

raise they buy planes, they lease them out, they take a margin, they raise capital, they buy planes, they lease them out, they take a margin. It’s um, not rocket science, is it really?

Cameron: well close though. ’cause it’s airplane sites, which is close to rockets. Um, yeah.[00:34:00]

Tony Kynaston: sure it’s more complex on that in terms of, you know what gotta predict what airline demand will be for what type of aircraft in the future, and da, da da. But, uh, I, as you say, they’ve got a horse trade. If someone wants to hand the plane back, can they releaase it, all that kind of stuff.

But still a pretty

Cameron: Actually, I skipped over that in in my, um. Uh, summary, but they actually have been selling a lot of old planes. Um, I can’t remember, I don’t can’t remember where the numbers are, but Oh, yeah. Here we go. Asset. This is from their Q3 report. They sold 32 assets for one and a half billion. With a record, 332 million gain on the sale, the highest ever quarterly gain.

So these assets are older aircraft engines and helicopters that they’re cycling outta their fleet, dumping, aging, or midlife assets, and they then recycle that capital into newer vehicles for the fleet. But um, yeah, so [00:35:00] selling old stuff is something that they’re quite good at too, by the looks of it.

Tony Kynaston: I was

Cameron: Um.

Tony Kynaston: the guy’s name, but there’s a, um. A Facebook profile that pop pops up on my reels every now and then about a guy who’s a pilot total life is just going from one airport to another, picking up new planes and ferrying them across the world to a new, a white tail plane across the world to a location.

And then, overnighting there and then jumping on another plane to go to another destination and pick something up and transport it to this incredible lifestyle. And

Cameron: if that gets old.

Tony Kynaston: Interesting. They often show him like

Cameron: Hmm.

Tony Kynaston: of a plane Lilo, a blow up Lilo. ’cause there’s no seats or anything in the plane. And that’s, that’s where they eat and sleep and for 80 hours while they fly a, a big dream liner around the world or something. Yeah. It’s Mm.

Cameron: Interesting way to spend your life. Uh, [00:36:00] so look, yeah, it looks good. And of course, as I said at the beginning of the show, Willis Lease Finance, which is similar but different, um, has done very well in our portfolio over the last couple of years. So these guys would’ve been good if we’d bought ’em two years ago as well.

But, uh, and, and we’re not adding ’em to our portfolio because we’re fully invested, but, um, they’re worth a look.

if

you’re looking for something.

Tony Kynaston: but Fleet Partners and SGI in Australia and the various different, there’s about three listed, three or four listed fleet managements for cars. you know, Yeah. have fleets of and, you know. Big corporations have fleets of vehicles, similar sort of model.

They buy the car, they lease the car, give the lessor a chance to buy it out after four years, otherwise they put it up for sale and they recycle the capital.

Cameron: Yeah.

Tony Kynaston: similar sort

Cameron: Yeah. And not a data center in site.

Tony Kynaston: although maybe AI can get in there and tell ’em how [00:37:00] to optimize their, their buys and sells and pricing and all that kind of stuff.

Cameron: Oh, I’m sure it will. Yeah. I’m sure there’ll be a lot of optimization of businesses like that as a result of ai. Yeah.

Tony Kynaston: optimization where they just team. The school kid just jumps in, hops in behind the Yeah,

flies the plane where it’s needed to go. Hops out, there was, there was a, there was a great shot in that episode four of Pluribus last week where it was in the hospital at the beginning and there’s like a 12-year-old kid pushing a hospital cart around working in the hospital because it doesn’t matter how old you are, everyone’s a doctor.

Cameron: Yeah.

Tony Kynaston: and I

I, had that thought. I wondered when they were gonna have a kid do surgery on this show. ’cause

Cameron: Yeah.

Tony Kynaston: Mm. You’re a

Cameron: Well, I wonder about that. I mean, you can have the knowledge of somebody that can do surgery, but does that mean you have the eye hand coordination of somebody that does surgery?

Tony Kynaston: [00:38:00] our age? Probably a teenager.

Cameron: It doesn’t take a lot of, it takes a lot. No, that doesn’t track. Like, you get a 12-year-old that’s never done kung fu and put ’em up against somebody who’s 60, who’s been doing kung fu for 30 years. The 60-year-old is gonna wipe them out because it’s 30 years of, you know, the muscles and the nerves, all of the, the hard wiring in your body.

Tony Kynaston: the 60-year-old into the 30-year-old brain or 12-year-old brain.

Cameron: Experience is one thing I’m talking about. It’s like your golf swing, right? You can’t, you can’t transfer somebody else’s thoughts about golf because it’s nerves, it’s muscles, it’s You don’t play golf just with your brain. You play it with your body, right? Your body has to have all, that’s not, that’s not.

Thought based. When you do a golf swing, it’s, you’re not, it’s not thought, right? It’s, it’s muscle memory.

Tony Kynaston: I accept your argument to the, to [00:39:00] the point of you couldn’t ask a 12-year-old to take something out of a high cupboard. You want someone who was fully grown to do it, but, if you said to them, Hey, here are all the memories of someone who takes things out of a high cupboard, they’d reach up just like anybody else would.

Cameron: We’re not talking about the higher cupboard. I’m talking about doing something that requires

 years of.

Tony Kynaston: It’s

Cameron: nerves. It’s, it’s, it’s

 okay. No, it’s not just in your brain. It’s, it’s in

it,

Tony Kynaston: fu kick.

Cameron: it’s in, it’s your brain and your nervous system and your muscles all working together

Tony Kynaston: Okay.

Cameron: like I was. Couple of years ago I was, I was at kung fu and there was a guy there, one of the black belts, been training for 20 years who’s standing on one leg just doing kicks for like 20 minutes, one leg, boom, boom, boom, boom, boom, boom, boom, boom, boom, boom.

Not putting the leg down, right? And I said, how do you, how do you do that? And he said, you just stand here and you do it for 10 years. [00:40:00] That’s how you do it, right? And he said, it’s because he said. All of the nerves in the muscles, in your foot, your ankle, your calf, your knee, your quads, your, you know, your hip flexes, your, your back, your spine.

Everything needs to be perfectly in sync and in line to be able to maintain the balance and the force and all of that kind of stuff. He said it’s just, it just needs, it takes time. It all needs to. Stitch itself together and figure it all out. Right? And I was like, oh, okay. I, you know, that’s why you can’t speed run, becoming good at kung fu or learning to play violin.

You can’t, it’s not like the matrix where you can go, do you know how to fly a helicopter? And you go, yeah. Okay.

 Because it’s not an instruction set. It’s, it’s a physical, it’s a physi, it’s an instruction set combined with physical motor system, um, training is my argument here.

Tony Kynaston: well, I dunno enough about it to counter it, but it seems to [00:41:00] me, if I understand what you’re saying, like if some things will require a certain muscle mass to do, like if you’ve been

Cameron: Not muscle. I’m not talking about muscle mass.

Tony Kynaston: I would’ve thought all those muscle twitches and responses to be able to stand on one leg and kick forever can still be downloaded. Whether the muscles have been bulked up enough to stand on one leg for long enough. But you

Cameron: No.

Tony Kynaston: still download and you’ll still, you would still sound on one leg and you would still kick, like you have Yeah, but you wouldn’t be as good at it.

bulked up to do it.

Cameron: No, not the bulk. I’m not talking about the bulk. I’m saying what, I guess what I’m saying is the information for how to do that well isn’t stored in the brain.

Tony Kynaston: Where’s the

Cameron: of it is in the, in your nerve, endings in your spine. Oh, yeah. Yeah, yeah, yeah, yeah. We know that you, you, you touch a hot [00:42:00] plate, you pull your finger back.

You don’t think I have to pull my finger back.

Tony Kynaston: reaction.

Cameron: It’s a reaction. What’s a reaction in,

Tony Kynaston: there’s no other

Cameron: it’s not in your brain. It’s not in your brain, it’s in your spine. It’s, it’s in your nervous system. Your nervous system has that information built into it. It’s not your brain. You don’t have time to think about it. It’s not even subconscious.

It doesn’t hit the brain.

Tony Kynaston: only available between the ears.

Cameron: Okay. I’ll get chat tippit to explain it to you after the show. Okay.

I dunno what that was. Dunno how we got into that Anyway.

Tony Kynaston: but, uh, yeah,

Cameron: Yeah.

Tony Kynaston: if they

Cameron: Uh, well, not a memory is in a memory. It’s information. I won’t call it, I wouldn’t call it memory. I’d say information is stored in the nervous system

Tony Kynaston: Okay.

Cameron: about how to respond to certain inputs and outputs. [00:43:00] And with that, uh,

Tony Kynaston: I.

Cameron: will be back, back next week. Thank you, tk.

Tony Kynaston: Okay, thanks.

Bernard: Q A V is a checklist-based system of value investing developed by Tony Khighneston over 25 years. To learn more about how it works and how you can learn the system, visit our website, Q A V Podcast dot com.

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Here’s an update on the performance of the other stocks we’ve done as a pulled pork (deep dive) since the start of the show. Average return so far is 47%.