With the bulk of global travel shut down in recent months, airports wouldn’t be an obvious attraction for investors. But one Australian portfolio manager says the recent damage to the industry has afforded a buying opportunity.
“I don’t believe airports are structurally broken, I think it’s a near-term hit,” said Sarah Shaw, chief investment officer and global portfolio manager at 4D Infrastructure in Sydney. “The trajectory is definitely still for increased air travel. People still want to go to Hawaii, people still want to go to Bali,” she said.
Shaw’s firm has maintained or boosted its investments in airports around the globe and also piled into utilities, seeking earnings-resilient assets that had been sold off indiscriminately during the rout.
4D Infrastructure, with about A$150 million ($102 million) in assets, lifted its exposure to European airports, including Spain’s Aena SME SA, Germany’s Fraport AG and Aeroports de Paris.
In the utilities space, the firm increased positions in Spain’s Iberdrola SA, which has energy operations around the world; NextEra Energy Inc., an American sustainable energy provider; and Sempra Energy, with operations in the U.S. and Latin America.
While markets needed to reprice due to the virus, many listed infrastructure companies became oversold despite attractive growth pipelines, not cutting their dividends and maintaining cash flow, Shaw said. Infrastructure assets are among winners from the global stimulus, she said.
“I am spoiled for choice at the moment,” Shaw said. After the volatility that characterized much of March subsided, “I just had all this wealth of opportunity to acquire really high-quality infrastructure names with very long duration assets and in many cases quite resilient earnings streams. This was going to be one of the most attractive buying opportunities of at least this decade, just because the market had overreacted.”
