The airline sector was among the best performing sectors in 2014, however, 2015 is shaping up to be a different story. Most of the airline stocks experienced a massive correction in May, when fears of a new price war brewing between airlines hit the markets and caused some of the prominent names in the sector to fall by more than 10% on a single day. In our endeavor to help our readers get an edge over other investors, we have analyzed the data from the latest 13F filings of the more than 730 funds we track to find out hedge funds’ favorite stocks in different sectors. Our previous posts saw us reveal the most popular restaurant stocks, as well as the most popular gaming stocks among hedge funds, and this article will divulge the top five airline stocks that smart money is placing its bets on. Read on further to know if the airline stocks in your portfolio soared onto our list or are languishing on the tarmac.
We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 118%, nearly two-times greater returns than the S&P 500 during the same period (see more details).
5. Ryanair Holdings plc (ADR)(NASDAQ:RYAAY)
Investors with Long Positions (as of June 30): 19
Aggregate Value of Investors’ Holdings (as of June 30): $406.11 Million
European airline Ryanair Holdings plc (ADR)(NASDAQ:RYAAY) is the only airline stock in our top five list that has posted year-to-date gains, currently hovering around 2%. While most airlines slumped heavily during the second quarter, Ryanair Holdings plc (ADR)(NASDAQ:RYAAY) was up by 6.9%, which possibly explains why its ownership among hedge funds rose by three and why the aggregate value of investors’ holdings in the company was up by $98 million during the quarter. The Board of Ryanair Holdings plc (ADR)(NASDAQ:RYAAY) made an announcement earlier in 2015 revealing its plans to start operating trans-Atlantic flights by the end of the decade. Hedge funds that became bullish on the stock during the second quarter included Paul Singer‘s Elliott Management, which initiated a stake in the company by purchasing 860,570 shares.
4. Southwest Airlines Co (NYSE:LUV)
Investors with Long Positions (as of June 30): 50
Aggregate Value of Investors’ Holdings (as of June 30): $1.74 Billion
Though the number of investors that were long in Southwest Airlines Co (NYSE:LUV) climbed from 44, the aggregate value of hedge funds’ holdings in the company saw a decline of 16% from the end of March. If one compares this decline in aggregate value with the 25.2% decline that the stock of Southwest Airlines Co (NYSE:LUV) suffered during the second quarter however, the total number of shares owned by hedge funds did go up along with the ownership. Southwest Airlines Co (NYSE:LUV) averted a major disaster on August 30, when alert passengers at an airport in California informed their cabin crew about a minor collision that took place between two Southwest Airlines Co (NYSE:LUV)’s planes minutes before take off. John Armitage‘s Egerton Capital Limited continued to remain the largest shareholder of Southwest Airlines Co (NYSE:LUV) among the funds tracked by us, in spite of reducing its stake in the company by 31% to almost 14.0 million shares during the second quarter.
3. United Continental Holdings Inc (NYSE:UAL)
Investors with Long Positions (as of June 30): 72
Aggregate Value of Investors’ Holdings (as of June 30): $3.21 Billion
Moving on to hedge funds’ third-favorite airline stock, United Continental Holdings Inc (NYSE:UAL). The aggregate value of hedge funds’ holdings in the company slid by $710 million, while hedge fund ownership dropped by six during the April-June period. The nearly 7% jump United Continental Holdings Inc (NYSE:UAL)’s shares saw on Friday on the back of the company being added to the S&P 500 have helped shareholders recoup some of the 21.2% losses they suffered during the second quarter. Cliff Asness‘ AQR Capital Management was one of the hedge funds that increased its stake in United Continental Holdings Inc (NYSE:UAL) during the second quarter, owning 3.37 million shares of the company at the end of June.
2. American Airlines Group Inc (NASDAQ:AAL)
Investors with Long Positions (as of June 30): 85
Aggregate Value of Investors’ Holdings (as of June 30): $2.54 Billion
Due to being down by almost 27% year-to-date, American Airlines Group Inc (NASDAQ:AAL)’s stock is currently the biggest loser in 2015 among all the airline stocks covered in this list. The number of funds that counted American Airlines Group Inc (NASDAQ:AAL) as one of their holdings slid by six and the aggregate value of investors’ holdings in the company declined by 26.5% during the second quarter. Analysts at Deutsche Bank upgraded American Airlines Group Inc (NASDAQ:AAL)’s stock to a ‘Buy’ from ‘Hold’ on September 1 and also raised their price target on it to $50 from $38.98, which represents a potential 21% upside to the stock’s current price. While their was an overall decline in hedge funds’ ownership of the stock, Phill Gross and Robert Atchinson‘s Adage Capital Management initiated a stake in American Airlines Group Inc (NASDAQ:AAL) during the April-June period of over 1.2 million shares.
1. Delta Air Lines, Inc. (NYSE:DAL)
Investors with Long Positions (as of June 30): 114
Aggregate Value of Investors’ Holdings (as of June 30): $7 Billion
Delta Air Lines, Inc. (NYSE:DAL) was the most popular airline stock among hedge funds as of June 30. Even though it lost 8.4% during the second quarter, the number of funds that had stakes in the stock declined by only two and aggregate value of investors’ holdings in the company saw a drop of only 1.60%. On August 31, the airline announced that it will soon be adding code-sharing flights with Japan Airlines. On the same day, the company filed an application before a Federal judge to order United Airlines to answer questions regarding its deal in which it subleased two of its Dallas Love Field gates to Southwest Airlines Co (NYSE:LUV). One of the most prominent hedge funds on the Street, Ken Griffin‘s Citadel Investment Group, upped its stake in Delta Air Lines, Inc. (NYSE:DAL) by 228% to over 8.2 million shares during the second quarter.
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