1) In Wednesday's e-mail on my favorite stocks for 2026, I put aircraft financing company Willis Lease Finance (WLFC) near the top of my list.
My friend runs a highly successful hedge fund focused on the financial sector and gave me the idea to add the stock. He wrote to me about the upside potential in the aviation industry:
We remain very bullish on the aviation leasing and servicing space. Aviation asset values continue to rise as a result of the supply-demand imbalance that originated during the pandemic and that industry experts believe will persist for another five to 10 years. As owners depreciate these assets, the gap between carrying value and fair value continues to expand, drastically understating book values in many instances.
Furthermore, higher lease rates are a natural tailwind to earnings, and while U.S. travel growth has been somewhat sluggish, global travel growth suggests the demand for aviation assets is unlikely to decline in the foreseeable future.
WLFC is his favorite way to play this theme, which is why it was 18.5% of his fund at year-end. He outlines why:
In addition to benefiting from the favorable operating environment, WLFC issued a press release on January 6 detailing the formation of Willis Aviation Capital to focus on the management of third-party assets, a venture that we believe will contribute meaningfully to earnings growth and make the company significantly more attractive to the investment community.
As part of this endeavor, in recent weeks, Willis has announced a $1 billion investment from Blackstone Credit & Insurance and a $600 million investment from Liberty Mutual Investments.
We view this strategy as a natural extension of WLFC's existing business, leveraging their industry expertise to meet investor demand for aircraft and aircraft engine exposure. The new venture will generate recurring revenue from management fees, carried interest, and servicing revenues, and more importantly, we believe this strategy could unlock some of our estimated $1 billion of unrealized gains that exist in the engine portfolio and order book that are not reflected in current stated book value.
This $1 billion of unrealized gains is significant, as WLFC has $650 million of stated equity and only a $1 billion market cap as of year-end, according to him.
He continues by comparing WLFC's approach with that of an industry peer:
As Willis Aviation Capital sources assets for the third-party capital to purchase, we believe WLFC could sell existing aviation assets and orders to these entities, realizing the fair value of the assets for accounting purposes. FTAI Aviation (FTAI) took a similar approach last year and the stock traded sharply higher on the news...
We're surprised investors who have latched onto the FTAI story aren't seeing that WLFC appears to be following a similar approach. Not only are the management, incentive, and servicing fees a great recurring revenue, it also holds all these engines captive for maintenance and other servicing revenue.
Lastly, FTAI recently announced it was creating a division to use jet engines to power AI data centers, and the stock has traded up another 25%-plus since then. Although WLFC traffics in more modern/newer engines, this use of older engines only adds to the scarcity value and life of all engines.
He concludes:
While our WLFC investment was detrimental to 2025 performance, our conviction has never been stronger and we believe the recent developments have not yet been reflected in the stock price.
Further, it is our view that WLFC could utilize the potential realized gains to fund significant share repurchases and/or increase its dividend payments in 2026.
Thank you for sharing your thoughts, my friend! I'm eager to see how this stock story plays out this year.
2) After flying straight to Las Vegas from South Africa and landing midday yesterday, I spent the afternoon at the enormous Consumer Electronics Show ("CES"). I've always loved the latest tech gadgets, so I was as happy as a kid in a candy store.
I didn't get any earth-shattering investment ideas yesterday. But I'll be looking for more today, the last day of the show, before I catch a 3 p.m. flight home.
However, I did visit a number of booths of companies I'm following and/or want to take a look at. Here are some pictures:
Clockwise from the top left, we have: me at the entrance... the exhibition by autonomous-vehicle company Waymo, owned by Alphabet (GOOGL)... the slick new boats and Mercury engines made by Brunswick (BC), which I previously looked at after seeing it here in 2020, 2023, and 2024... a Deere (DE) harvester... a Caterpillar (CAT) excavator... and lastly, an autonomous vehicle by Amazon (AMZN) subsidiary Zoox, which is operating here in Las Vegas and will soon launch in San Francisco.
As readers likely know, I remain a fan of Alphabet and just named Amazon as my favorite big-cap tech stock for 2026. And I plan on taking a quick look at Brunswick, Deere, and Caterpillar in the future, so stay tuned!
3) One major observation from CES is the massive number of no-name Chinese companies in just about every sector, which doesn't bode well for the bigger brand-name U.S. and European companies.
For example, there were at least a dozen Chinese companies making various types of smart glasses like my Meta Ray-Bans. I love using mine to make calls and take high-quality pictures and videos without pulling out my phone. This comes in handy when, say, I'm riding my bike or it's raining (see these two videos I took in South Africa).
I gave my first-generation Meta Ray-Bans (which are marked down to $224.25) to a friend earlier this week and ordered these second-generation ones in "Shiny Cosmic Blue." They have transition lenses, meaning they're clear indoors but turn dark in the sun. I can't wait to try them out!
4) Lots of companies were selling their latest gadgets, but the only thing I bought was an Insta360 GO Ultra action camera. It's $449.99 on the company website, but the salesperson gave me a code, CES2026, to knock $50 off. (I don't know if it'll work after CES ends today.)
It's a newer, better model of my old Insta360 GO 3S ($379.99 on Amazon), which I gave to a friend in Kenya. Both models are like a GoPro Hero 13 ($319 on Amazon), which I used to own. But I like the Insta360 better thanks to its small, waterproof, detachable camera. Check out the underwater videos I took with it while snorkeling in Kenya.
Best regards,
Whitney
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