AerSale Corporation’s (NASDAQ:ASLE) market cap dropped US$62m last week; Private equity firms bore the brunt

AerSale Corporation’s (NASDAQ:ASLE) market cap dropped US$62m last week; Private equity firms bore the brunt

To get a sense of who is truly in control of AerSale Corporation (NASDAQ:ASLE), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 46% to be precise, is private equity firms. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to US$1.0b last week, private equity firms would have faced the highest losses than any other shareholder groups of the company.

Let’s take a closer look to see what the different types of shareholders can tell us about AerSale.

Before we look at the ownership breakdown, you might like to know that our analysis indicates that ASLE is potentially undervalued!

NasdaqCM:ASLE Ownership Breakdown September 17th 2022

What Does The Institutional Ownership Tell Us About AerSale?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in AerSale. This suggests some credibility amongst professional investors. But we can’t rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at AerSale’s earnings history below. Of course, the future is what really matters.

NasdaqCM:ASLE Earnings and Revenue Growth September 17th 2022

Our data indicates that hedge funds own 5.2% of AerSale. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Leonard Green & Partners, L.P. is currently the company’s largest shareholder with 46% of shares outstanding. With 5.7% and 5.5% of the shares outstanding respectively, Nicolas Finazzo and Robert Nichols are the second and third largest shareholders. Note that the second and third-largest shareholders are also Chief Executive Officer and Vice Chairman, respectively, meaning that the company’s top shareholders are insiders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of AerSale

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of AerSale Corporation. It is very interesting to see that insiders have a meaningful US$162m stake in this US$1.0b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 18% stake in AerSale. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With an ownership of 46%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We’ve spotted 1 warning sign for AerSale you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Valuation is complex, but we’re helping make it simple.

Find out whether AerSale is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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