+- Dividend Growth Forum (http://DividendGrowthForum.com)
+-- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=15)
+--- Forum: Individual Dividend Growth Stocks (http://DividendGrowthForum.com/forumdisplay.php?fid=35)
+--- Thread: FLY (/showthread.php?tid=395)
FLY - jmjor - 02-13-2014
FLY is an interesting speculation - high current yield, low current evaluation, maybe solid growth prospects in earnings & dividends.
I'm thinking about taking a small position in it, any thoughts?
RE: FLY - Dividend Watcher - 02-13-2014
I'll play devil's advocate. Here are a few points that gave me concern.
One shareholder, Onex Capital, owns 50% of the stock.
BBAM LP is not also their agent and fleet manager but also a competitor.
From their 2012 annual report:
"BBAM has conflicts of interest with us and their limited contractual or other duties will not restrict them from favoring their own business interests to our detriment.
Conflicts of interest will arise between us and BBAM LP with respect to our operations and business opportunities. BBAM LP acquires, manages and remarkets aircraft for lease or sale for us and for other entities, including entities in which Summit and Onex may have an economic interest."
Summit is an operating entity of BBAM which purchased all the assets & liabilities of another leasing company which no longer operates.
Further:
"Under the terms of our servicing agreements, we are not entitled to be informed of all conflicts of interest involving BBAM and are limited in our right to replace BBAM because of conflicts of interest."
LT debt/equity = $2,052M/$532M (2012 Annual Report)
The airline business is highly cyclical and fluid. Airlines are merged, divested and bankrupted quite frequently.
Could be a speculative play but I'd keep a close eye on it.