In this article, we discuss the 4 best airline stocks to buy according to hedge funds. If you want to see our detailed analysis of these stocks, go directly to the 9 Best Airline Stocks to Buy According to Hedge Funds.
4. Alaska Air Group, Inc. (NYSE:ALK)
Number of Hedge Fund Holders: 38
Washington-based Alaska Air Group, Inc. (NYSE:ALK) is an airline holding company. The firm provides air services to passengers through its three segments: Alaska Mainline, Alaska Regional and Horizon Air. The airline company is ranked fourth on our list of the 9 best airline stocks to buy according to hedge funds.
In its earnings results for the second quarter of 2021, the firm reported earnings per share of -$0.30, beating market estimates by $0.14. The revenue for the quarter was reported to be $1.53 billion, an increase of 262.71% on a year-over-year basis, surpassing predictions by $9.22 million.
By the end of the second quarter of 2021, 38 hedge funds out of the 873 tracked by Insider Monkey held stakes in Alaska Air Group, Inc. (NYSE:ALK) worth roughly $505.8 million. This is compared to 32 hedge funds in the previous quarter with a total stake value of approximately $587.9 million.
On October 1, JPMorgan analyst Jamie Baker raised his price target on Alaska Air Group, Inc. (NYSE:ALK) to $97 from $94, and kept an Overweight rating on the shares.
In its Q1 2021 investor letter, White Brook Capital, an asset management firm, explains why it sold its shares of Alaska Air Group, Inc. (NYSE:ALK). Here is what the fund said:
“Despite initiating a position in the fourth quarter, Alaska Airlines Group, Inc (ALK) was sold during the first quarter. The Alaska Airlines investment was envisioned to be a long-term investment, but the stock price appreciated more quickly than expected. Like many other “re-open trades”, the value of the company including its debt now exceeds the value pre-pandemic. For that to be reasonable I’d have to believe:
1) The company/industry had too little debt and by adding debt they’ve better optimized their balance sheet for equity returns while still maintaining downside resiliency;
2) The company/industry’s profitability will be better moving forward than it was pre-pandemic and therefore warrant a higher multiple; and/or
3) The company/industry was significantly mispriced before the pandemic.
The first was true of Alaska Airlines pre-pandemic, but the certainty one can have about the second and third is not high enough to compel continued investment at today’s prices. The intended long-term position turned into a short-term trade with an exceptional IRR.”
3. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 39
United Airlines Holdings, Inc (NASDAQ:UAL) is an airline holding company based in Illinois. The company provides provides transportation services for passengers and cargo, as well as satellite-based Wi-Fi through its overseas routes. Ranked third on our list of the 9 best airline stocks to buy according to hedge funds, United Airlines Holdings, Inc. (NASDAQ:UAL) has a market capitalization of $16.23 billion.
On the first week of October, the airline company rallied more than 3.5%, most likely due to Merck & Co., Inc (NYSE:MRK)’s antiviral pill, Molnupiravir, a cheap antiviral option, which could potentially lead to a faster end to the pandemic. For the second quarter of 2021, the airline company declared revenues of $5.47 billion, an increase of over 270.92% on a year-over-year basis, crossing forecast estimates by $116.02 million.
Earlier this July, MKM Partners analyst Conor Cunningham kept a Neutral rating on United Airlines Holdings, Inc. (NASDAQ:UAL) alongside a price target of $61.
By the end of the second quarter of 2021, 39 hedge funds out of the 873 tracked by Insider Monkey held stakes in United Airlines Holdings, Inc. (NASDAQ:UAL) worth roughly $704 million. This is compared to 38 hedge funds in the previous quarter with a total stake value of approximately $1.02 billion.
2. Southwest Airlines Co. (NYSE:LUV)
Number of Hedge Fund Holders: 49
Southwest Airlines Co. (NYSE:LUV) is a major American airline company, and is the world’s largest low-cost air carrier. The company provides passenger airline services through its fleet of over 718 aircraft that travel to 121 destinations in the world. The airline firm ranks second on our list of the 9 best airline stocks to buy according to hedge funds.
On October 4, Barclays analyst Brandon Oglenski upgraded Southwest Airlines Co. (NYSE:LUV) to Overweight from Equal Weight, with a price target of $75, up from $64.
The company last released its quarterly earnings report on July 22, with earnings per share at -$0.35, falling short of the market estimates by $0.12. On the other hand, the company reported revenues at $4.01 billion, an increase of over 297.62% on a year-over-year basis, surpassing market predictions by $69.46 million.
By the end of the second quarter of 2021, 49 hedge funds out of the 873 tracked by Insider Monkey held stakes in Southwest Airlines Co. (NYSE:LUV) worth roughly $926 million. This is compared to 52 hedge funds in the previous quarter with a total stake value of approximately $747 million.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Southwest Airlines Co. (NYSE:LUV) was one of them. Here is what the fund said:
“One of our goals as we constantly monitor the portfolio is to see if we can better deploy capital by lowering the probability of being wrong. This motivation drove our swap of Delta Airlines into Southwest Airlines during the quarter. We expect a huge rebound in airline traffic as COVID-19 concerns abate, but we are much more comfortable that it will be led by leisure travel. Conversely, we are more uncertain of the ultimate level and timing of business travel demand. Southwest, with its simple fare strategy and high leisure travel exposure, is better positioned to capture the ongoing traffic rebound without having to answer the business travel demand question on which Delta is more dependent. As a result, we expect Southwest to play serious offense as it gains share in the rebounding travel market and can fully leverage the massive pent-up demand for travel that we expect. In addition, the U.S. lead in vaccination over Europe favors Southwest over Delta, given the domestic focus of Southwest. COVID-19 has changed many things, but humans by their very nature like to move, and many of them will do it on Southwest.”
1. Delta Air lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 49
Delta Air Lines, Inc. (NYSE:DAL) is a major airlines firm based in Georgia. Owning and operating a fleet of over 1,110 aircraft, the company provides air travel services to over 300 destination in 60 countries. Delta Air Lines, Inc. (NYSE:DAL) has a market capitalization of $28.48 billion, and is ranked first on our list of the 9 best airline stocks to buy according to hedge funds.
On July 14, Delta Air Lines, Inc. (NYSE:DAL) released its quarterly earnings report, with declared EPS of -$1.07, crossing market estimates by $0.32. The revenue for the quarter was reported at $7.13 billion, an increase of 385.42% on a year-over-year basis, surpassing the forecast revenue by $858.07 million.
On August 11, Redburn analyst James Goodall initiated coverage of Delta Air Lines, Inc. (NYSE:DAL) with a Neutral rating on the company shares.
By the end of the second quarter of 2021, 49 hedge funds out of the 873 tracked by Insider Monkey held stakes in Delta Air Lines, Inc. (NYSE:DAL) worth $1.2 billion. This is compared to 50 hedge funds in the preceding quarter with a total stake value of approximately $1.09 billion.
Out of the hedge funds being tracked by Insider Monkey, London-based Lansdowne Partners is among the leading shareholders of Delta Air Lines, Inc. (NYSE:DAL), with over 4.58 million shares worth more than $198.5 million.
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