Investing

Billionaire Glenn Greenberg's Brave Warrior Advisors Makes Significant Investment in Ryanair While Reducing Financial Holdings

Will Ashworth

Published: January 2, 2025 9:15 am

For those unfamiliar with Glenn Greenberg, the billionaire co-founded Chieftain Capital in 1984 with John Shapiro. In 2009, the partnership ended, with Shapiro taking the name to a new partnership, while Greenberg kept the business, renaming it Brave Warrior Advisors. It considers itself a value investor.

In the latest quarter ended Sept. 30, Brave Warrior’s portfolio had a value of $4.82 billion, with funds invested in 32 stocks. The hedge fund’s largest holding is Elevance Health (NYSE:ELV), the health insurer formerly known as Anthem. It accounts for 17.71% of Brave Warrior’s assets.  

In the third quarter, Greenberg bought six new stocks, sold out of one, added to six holdings, and reduced 12 more. 

The New York-based hedge fund significantly reduced its financial services holdings during the quarter and moved the proceeds into Ryanair Holdings (NASDAQ:RYAAY), Europe’s largest airline group. 

Here’s why. 

Key Points About This Article:

• The hedge fund passes on U.S. airlines, opting for one of Europe’s best low-cost operators.  
• Ryanair Holdings (NASDAQ:RYAAY) has a higher valuation than many U.S. peers.
• Given its shareholder-friendly capital allocation, it’s easy to understand why.
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “2 Legendary High-Yield Dividend Stocks” now.

Finance Stocks Were Trimmed in Q3 2024

As mentioned in the introduction, Brave Warrior reduced 12 of its holdings in the third quarter. Five of these stocks were financial services companies, all among the top 10 holdings, accounting for 83.5% of its assets. 

Regarding shares sold, two of the five were for over a million: Apollo Global Management (NYSE:APO) and Fidelity National Financial (NYSE:FNF). 

During the third quarter, Brave Warrior reduced the former’s position by 1.5 million shares (39.7%). As a result, it now accounts for 5.9% of the portfolio, down 400 basis points from Q2 2024. It is the eighth-largest holding. It cut the latter by 1.36 million shares (18.4%). As a result, it now accounts for 7.7% of the portfolio, down 33 basis points from Q2 2024. FNF is the fifth-largest holding.

According to Insider Monkey, financial stocks accounted for 33.1% of Brave Warrior’s holdings as of Sept. 30. Services stocks were second at 23.3%, while healthcare was third at 17.8%. 

Of the five finance stocks, Apollo, Discover Financial Services (NYSE:DFS), and Primerica (NYSE:PRI) are all up 30% or more in 2024, with Apollo leading the way, up 87%. 

Taking profits and redeploying the proceeds into something with greater potential upside is never a bad idea. That’s especially true when you’re a value investor like Greenberg.  

Brave Warrior Redeployed Assets Into Ryanair

One thing you learn when writing about stocks for a while is that the data doesn’t always add up. That’s the case with Ryanair.

My first source for holdings, WhaleWisdom, shows Brave Warrior holding 12.75 million RYAAY shares at the end of the third quarter. However, Dataroma.com shows Greenberg’s firm held 5.1 million shares at the end of Q3 2024, up 4,012.83% from the second quarter. 

The hedge fund’s 13F from Sept. 30 confirms that 5.1 million shares is the amount. However, it held 49,640 shares as of June 30, so it added 5.05 million in the third quarter, which is a 10,182% increase over the second quarter.

Even with the discrepancy, of the six stocks that Greenberg added to in the third quarter, Ryanair was easily the most significant addition, both in terms of shares bought (5.1 million) and dollar value ($217 million), based on $42.90, the average of the quarterly high ($48.82) and low ($36.97). 

Ryanair went from accounting for 0.13% of Brave Warrior’s portfolio at the end of the second quarter, to 4.78% at the end of the third, vaulting it into 11th position.

What Is It About Ryanair That Got Brave Warrior to Bite?

First, its stock is down over 14% year-to-date, which is considerably worse than the major U.S. airlines–Delta Air Lines (NYSE:DAL) is up 51%, and United Airlines Holdings (NASDAQ:UAL) has appreciated by a whopping 143%–suggesting there is a valuation differential that’s bound to shrink in 2025.

However, that doesn’t appear to be true. According to S&P Global Market Intelligence, Ryanair’s enterprise value is 6.73x its latest 12-month EBITDA (earnings before interest, taxes, depreciation, and amortization), compared to 4.81x for Delta and 3.99x for United. 

In the next three fiscal years, analysts expect Ryanair to earn $2.97 (2025), $3.73 (2026), and $4.65 (2026), respectively. Thus, it trades at 9.5x its 2027 earnings. Meanwhile, UAL trades at 7.1x its 2026 projected EPS of $14.05, and Delta trades at 7.4x its 2026 EPS estimate of $8.33. 

One area where Ryanair shines is on the balance sheet. 

As of Sept. 30, its total debt was 2.74 billion euros ($2.85 billion), 0.98x its EBITDA. Delta’s total debt was $25.49 billion, or 2.1x EBITDA, and United’s was $33.36 billion or 2.9x EBITDA.

Ryanair has net cash of 584.4 euros ($608.2 million), while Delta and United have net debt of $21.51 billion and $19.2 billion, respectively. I don’t think there’s any question about whether Ryanair has a much cleaner balance sheet. 

Another area where it is more attractive than Delta or United is its capital allocation. I’ve already discussed its focus on balance sheet and focus on debt repayment. It also returns significant capital to shareholders through dividends, special dividends, and share repurchases. 

On its investor relations website, the airline points out that since fiscal 2008, it has returned 8.64 billion euros ($8.99 billion) to shareholders with dividends accounting for 5%, special dividends (22%), and share repurchases (73%). 

In November 2023, the company announced that it would pay its first dividend in 2024 due to rising profits. It paid out 200 million euros ($208.06 million) in February and another 200 million euros in September. The total payment of 1.57 euros ($1.63) a share is a 3.7% dividend yield based on the company’s current share price. The company plans to pay out 25% of its after-tax profit for dividends. 

As for share repurchases, it bought back 850 million euros ($884.3 million) of its stock in the first half of fiscal 2025 (March year-end) and expects to buy back another 800 million euros ($832.3 million) in the second half of the fiscal year.   

The European approach to shareholder returns is refreshing. It pays out 25% of after-tax profits as dividends. If the company has a bad year, the per-share payout will be lower, but if it has a good year, the payout will be higher than expected. 

It’s easy to see why Brave Warrior and Greenberg are attracted to Ryanair.