Following up on Willis Lease Finance; More points of interest regarding artificial intelligence; Scott Galloway on equal-weight S&P 500 Index funds; Bill Ackman's presentation on Fannie Mae and Freddie Mac; My marriage advice
1) Last Thursday, I shared my bank-analyst friend's bull case for Willis Lease Finance (WLFC). In response, one of my readers, Jay H., asked for some additional insight:
Yahoo Finance shows WLFC with the following:
1) A debt to equity ratio of over 300%, and just $15 million in cash vs. $2.26 billion in debt.
2) Negative free cash flow of $265 million.
3) Shares shorted as a percentage of float at 71.5% as of 10/31/2025.
So I would be inclined to avoid WLFC because of these three statistics.
I'm curious why those statistics haven't stopped your bank analyst contact from being so bullish on WLFC?
I ask this question in earnest hoping to discover why I shouldn't let those three numbers prevent me from understanding the value in WLFC. What am I missing?
I forwarded Jay's e-mail to my friend, who replied:
We wish the short interest was 71%, as that would be a massive tailwind for us. Nothing is better than a misinformed short who was a forced buyer at some point in time, probably the worst possible time. The float is around 2.3 million shares, so short interest is still elevated at around 17% of the float.
We saw notes from a Morgan Stanley event where someone presented WLFC as a short, and it was comically bad and misinformed. The guy didn't understand the company's accounting and gave reasons to be short that were actually reasons you would be long the stock (supply chain problems, issues at Boeing, etc.).
A few others may be short the stock thinking that the Willis family will do a secondary offering to sell shares, but we have a very strong opinion that they will not, at least not at these prices. I didn't mention the short interest in my note [on Thursday] but it is one of our favorite aspects of the stock as those shares are guaranteed buyers at some point!
As for the debt and cash flow numbers, those simply aren't metrics you would look at for a company like this – almost any finance company would look horrible. WLFC is investing a lot in growth, though. But still, those metrics wouldn't be what someone would want to use in their analysis. It would be sort of like looking at cash at a bank when all the deposits they have are actually a liability versus an asset.
Thank you for the excellent question and thoughtful response!
2) I did a three-part series of my thoughts on artificial intelligence ("AI") on November 7, November 10, and November 12. Following up, here are some additional points of interest...
My friend John Zolidis of Quo Vadis Capital, whom I've quoted many times (archive here), recently attended the analyst day in Shenzhen, China for restaurant operator Yum China (YUMC).
He said the company spent a considerable amount of time discussing how it has been integrating AI into its business. He listed some of its applications that a non-tech-focused person could appreciate:
1) Using Agentic AI to aid and train customer service reps and resolve restaurant-level execution issues;
2) Using AI to assist in the new store site-selection process, particularly in reviewing lease terms;
3) Using AI to optimize complex supply chains; and lastly
4) Using AI to customize and test customer incentives though the loyalty program and via their super app.
The takeaway for me is that a large, well-capitalized company like YUMC is at a huge advantage with its tech platform, and competitors that aren't implementing AI solutions are in trouble.
As this post by Aakash Gupta on social platform X notes, China has developed AI models for a fraction of the cost of the U.S. giants like OpenAI, Anthropic, and Alphabet (GOOGL). Here's the first half of the post:
But it's not just tech giants and large businesses that are using AI. This Wall Street Journal article details how small-business owners are putting AI to good use as well:
An August report from the U.S. Chamber of Commerce found that 58% of some 3,800 small businesses surveyed said they use generative AI. That is up from 40% in 2024 and more than double what it was two years prior.
Restaurants are using AI to schedule worker shifts. Event planners use it to make seating arrangements and provide quotes. Interior designers are using image-generation tools to visualize color changes or room layouts.
3) Thank you to the many readers who pointed out a typo in Friday's e-mail. After showing two charts on how the traditional market-cap-weighted S&P 500 Index had outperformed an equal-weighted one, I wrote:
This is one of the reasons why I recently shifted 40% of my S&P 500 holdings from the traditional index to a market-cap weighted one.
Of course, I meant that I'd shifted 40% of my assets to an equal-weighted one. New York University marketing professor Scott Galloway agrees with me, writing in his latest Prof G Markets newsletter:
For U.S. equities, this may be a good time to consider equal-weight S&P 500 [exchange-traded funds]. Goldman analysts expect them to return 8% annually in the next decade, beating the traditional S&P 500 by 5 percentage points per year.
4) For those of you interested in Fannie Mae (FNMA) and Freddie Mac (FMCC), my college buddy Bill Ackman of Pershing Square Capital Management will be giving a presentation on his plans for the two government-sponsored entities tomorrow at 10:30 a.m. Eastern time.
You can get all the details from his X post here:
5) Speaking of Bill, his "May I meet you?" post is breaking the Internet:
It has more than 27 million views since he posted it on Saturday and has spawned lots of memes. I can confirm that Bill has been using this line for 30-plus years!
Of course, meeting someone is just the first step. Then comes dating and, if things go well, the most important decision of your life: Should you marry this person?
I shared my advice about this in my book, The Art of Playing Defense. In it, I outlined my "12 Questions to Ask Before You Marry Someone," which you can read here.
But marrying the right person isn't enough. Over the following decades, you need to avoid screwing up a good thing.
That's why I devoted 31 pages of my book to "Maintaining a Healthy Marriage," which you can read here. I also wrote about this topic on October 10, my 32nd wedding anniversary.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.