May 6, 2019 / 4:48 PM / 3 months ago

Greenlight's David Einhorn pitches long on AerCap, short on GATX at Sohn Conference

FILE PHOTO: David Einhorn, President of Greenlight Capital, Inc., presents during the 2018 Sohn Investment Conference in New York City, U.S., April 23, 2018. REUTERS/Brendan McDermid/File Photo

(Reuters) - David Einhorn, president of Greenlight Capital, at the Sohn Investment Conference on Monday said his firm is positive on airplane leasing company AerCap Holdings and negative on railcar leasing company GATX Corp.

Einhorn said GATX has “trouble returning to pre-crisis usage levels,” while AerCorp shares are trading at half the book value and less than half the price-to-earnings of GATX’s shares.

Speaking favorably of both industries, he said the airline sector has some advantages over rail that make AerCap the better choice over GATX, whose shares he believes are overvalued. “Neither has consumer-facing businesses, and both have terrible news. AerCap operates in a growing industry with a favorable outlook,” Einhorn said. “We think the market has it wrong.”

AerCap shares are up 31% in 2019, while GATX has gained 11% year-to-date.

AerCap is the industry leader with 11% marketshare, he noted. As aircraft manufacturers Airbus and Boeing have backlogs of multiple years, aircraft leasing companies step in to fill the gap as air travel continues to increase around the globe.

Einhorn, who told the Sohn Investment Conference that the theme of his pitch involved Trains, Planes and Automobiles, referencing a 1987 movie, reassured the audience that he still did not like Tesla Inc. Einhorn started out with a slide show of Tesla CEO Elon Musk’s statements about his electric car company and concluded by saying that’s “a lot of horseshit.”

Einhorn has been short Tesla. In a letter to clients last month, Einhorn’s Greenlight renewed criticism of Musk and Tesla, saying the electric car company appeared to be “on the brink” of failure again.

The letter cited a lack of demand, “desperate” price cuts, layoffs, “closing-and-then-not-closing” stores, closing service centers, slashing capital expenditures, rushed product announcements and “a new effort to distract investors from the demand problem with hyperbole over TSLA’s autonomous driving capabilities.”

Tesla did not immediately respond to a request for comment on Einhorn’s remark.

Reporting By Jennifer Ablan; Editing by Chizu Nomiyama and Nick Zieminski

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