Lock in an 18% profit that won’t last long

Annual results from the aircraft leasing fund Amedeo Air Four Plus (AA4:43.75p) highlight a valuation anomaly that will likely disappear over the next 12 months for a number of reasons.

First, the fund’s fleet of 12 aircraft includes four A350-900s leased to Thai Airways until 2035. The aircraft generate £26.7m of rental income, which covers the cost of financing $344m (£268m) of low-interest secured loans, as well as reducing the debt secured on the aircraft. Investment manager Amedeo estimates that the four Thai aircraft have a current value of $111m each, meaning the fund has at least $100m (£78m) of retained equity. To put this into perspective, this equates to 23 per cent of Amedeo’s net asset value (NAV) of £339m and 59 per cent of the company’s £133m market capitalisation.