market folly

We're posting notes from the Sohn London investment conference 2016.  Next up is Adrian Croxson head of European Equities at Och-Ziff Management who pitched long Ryanair (LON:RYAN).


Adrian Croxson's Sohn London Conference Presentation

Long Ryanair Holdings (LON: RYAN) 

Och-Ziff have owned Ryanair stock for two years. Ryanair’s own projections suggest that they can grow volumes at 8% per year for the next 8 years. They have enough capacity to do that because they have lower costs. They fly 120 million passengers per year. Demand for air travel will continue to grow. Ryanair keeps taking market share from competitors. It can grow market share from 15% to 25% over the next few years.

It is the lowest cost producer in Europe with 50% less overhead than main competitor Easyjet. Staff costs are low due to route density not necessarily because they pay staff less. They require fewer crews as staff can work out of more than one airport. Landing costs for Ryanair have been flat over the last couple of years because they have gone into airports where other airlines have gone bust.  They have a good record for buying planes cheaply as they tend to buy when demand is low. They are getting better at cross selling passengers hire cars and hotels. They do not spend a lot of money on marketing.

Net income can double in the next seven years and the share count will diminish due to buybacks. The CEO owns £1bn of stock.

Be sure to check out the rest of the Sohn London conference presentations here.