Montaka's best idea and why

Montaka Global Investments – Christopher Demasi

Montaka Global Investments (Montaka) is a global equities fund manager, founded in 2015 by Andrew Macken and Christopher Demasi, which seeks to deliver higher returns with lower risk than the market. Montaka’s long/short strategy invests in a high-conviction long portfolio of high-quality businesses that are materially undervalued and an independent short portfolio of businesses that are structurally challenged, misperceived and overvalued. A long-only version is also offered. Montaka’s founders and team members are the majority-owners of the business and invest substantially all their personal wealth alongside clients. Montaka has offices in Sydney and New York and manages over A$500 million.

Recommendation: Airbus SE (AIR FP)

Airbus is a leading global aerospace company generating almost €70 billion in annual revenue. Airbus Commercial is the crown jewel (75% of total revenues and 90% of profits). It is one of the world’s leading manufacturers of passenger aircraft, including the narrow-body A320, the wide-body A350, and the world’s largest passenger airliner, the A380. Airbus Helicopters is a global leader in civil and military rotorcraft, and Airbus Defence and Space is a leading supplier to militaries and the space industry.

What Christopher says about Airbus

  • Airbus is a high-quality business, stemming from its market leading position in the highly attractive industry for passenger aircraft, demonstrated by return on equity above 30%.
  • Airbus leads US-based Boeing in a global duopoly for passenger jets, with almost 60% of narrow-body orders (A320) and half of wide-body orders (A350). Airbus’ backlog of 7,000 orders stretches nine years, securing leadership for the foreseeable future.
  • The market structure is virtually impervious to disruption. Initial capital outlays of tens of billions of dollars, decade-plus payback periods, and technological expertise and commercial relationships developed over decades are extremely high barriers for potential entrants.
  • Airbus will benefit from structural growth tailwinds over the next 20 years, as the global middle-class population increases by two billion people, demand for air travel more than doubles, and airlines purchase over 37,000 planes to expand their fleets.
  • Deliveries of Airbus’ key A320 and A350 aircrafts will ramp quickly and grow strongly, more next-gen and long-range variants will be sold for higher prices, and profit margins will ultimately double.
  • At the current share price, we think the market is underappreciating this long run growth and profit opportunity. We estimate the stock is worth €150 per share today, or 50% upside, with little downside risk.
Company information   AIR: 5 year share history
Ticker code: AIR
Market Capitalisation:

€78.5 billion

Average daily volume:

1.589 million shares

52 week range:

€81.21 - €110.06

Bloomberg consensus:

25 Buys, 5 holds, 0 Sells

Average price target:

€117.77

 

AIR-5yr-chart

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