4. Grupo Aeroportuario del Centro Norte S.A.B. de C.V. (NASDAQ:OMAB)
Number of Hedge Fund Holders: 9
A major participant in Mexico’s airport industry, Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) presents an appealing investment opportunity because of its monopoly-like position, steady double-digit earnings growth, and outstanding shareholder returns. Since becoming public in 2006, OMAB has operated 13 airports, with a portfolio that includes major hubs, popular tourist attractions, and smaller cities throughout northern Mexico. The company has a track record of generating a 16.8% annual total return. These airports are essential to the Mexican economy because they give investors access to a crucial component of the infrastructure that supports trade and tourism in the whole country.
The company’s growth possibilities are related to the Master Development Program (MDP), which requires it to provide traffic forecasts, capital investment plans, and maintenance projections every five years. The business can increase the fees it charges airlines and passengers in return for this investment, which offers a clear way to increase revenue. Inflation and rising demand for airport services are expected to result in higher charges under the next MDP, which is scheduled to go into force in 2026. Since air traffic has grown historically and Monterrey Airport is expected to become a regional hub, Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB)’s revenue base should rise more quickly than traffic alone.
Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) is in a unique position in the airport business due to its monopoly-like operations, which are supported by advantageous government contracts. Since the firm has no direct rivals for the airports it oversees, it has considerable pricing power in contrast to airlines, which are subject to fierce competition. Additionally, the business performs well in both prosperous and struggling times due to its capacity to increase costs in accordance with inflation without alienating clients. It maintained favorable returns despite the difficulties of 2020, proving the strength of its business strategy.
Jim Simons’s Renaissance Technologies was the largest stakeholder in the company from among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 211,700 shares worth $14.36 million as of Q3.
Middle Coast Investing stated the following regarding Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) in its Q3 2024 investor letter:
“We added meaningfully to our Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) (Central North Airport Group in Mexico) position. A year ago, shares of this and PAC (Pacific Airport Group) plunged on government regulation concerns, but also a hurricane hitting Acapulco (OMAB runs the airport) and plane engine issues for the major Mexican airline, Volaris.
We start to lap those issues in October and November, meaning comparisons get easier for the business. Mexico also has a new president, Claudia Sheinbaum. She is from the same political party, and that party has a supermajority and is ramming through a controversial judicial reform. But I expect her to be less contentious and more technocratic than her predecessor, Andreas Manuel Lopez Obrador (AMLO) [3]. And PAC recently announced (PDF) its new Master Development Plan approved by the government, and while it calls for a lot of investment, it also has healthy tariff increases built in. I don’t think the government is “coming” for the airport businesses, and the share prices are more than reasonable.”
