Billionaires Are Riding These Transportation Stocks

It is expected that the Trump administration will provide a boost to the infrastructure sector. He has already proposed spending $1 trillion on roads, airports, pipelines and the electrical grid. According to Donald Trump, it will pave the way for USA to create more jobs. The hedge funds and institutional investors have also followed suit and have shown signs of increased interest in the transportation stocks. While there have been a lot of mergers in the US airline industry, the railway industry has also seen a number of merger overtures being made by the large players. Given below is a list of few airline and railroad stocks which billionaires love.

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Delta Air Lines, Inc. (NYSE:DAL) witnessed billionaires increase their stake in it to $1.04 billion during the third quarter from $654 million in the quarter earlier. The number of such funds also increased to 11 from 8 and includes Israel Englander’s Millennium Management, Steve Cohen’s Point72 Asset Management and D.E. Shaw. According to its latest 13F, Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) owned 6.33 million shares of Delta Air Lines, Inc. (NYSE:DAL) as of September 30^th. The stock is up more than 34% in the last three months and has an average rating of buy from most analysts. For the quarter ended September, the company reported a net profit margin of 12% and operating margin of approximately 19%. However, hedge funds seemed to have an opposite view on Delta Air Lines, Inc. (NYSE:DAL) with the number of bullish funds declining to 85 from 94 in the earlier quarter. They accounted for 16.6% of the company’s float as of September 30^th.

10 billionaire funds reported having equity stakes in FedEx Corporation (NYSE:FDX), which remained constant quarter over quarter. However, the total value of their holdings increased to $2.28 billion in the third quarter, from $1.71 billion in the quarter earlier. Some of the billionaires reporting stakes in the company in the last round of 13F filings include Millennium Management and D.E Shaw, which bought 343,143 and 564,708 shares respectively during the third quarter. The stock has a consensus overweight recommendation and is trading very close to its yearly high price of ~$192. FedEx Corporation (NYSE:FDX) reported a quarter on quarter increase of approximately $2 million in revenues to $14.6 billion, for the quarter ending August. As per our database, the number of hedge funds long in FedEx Corporation (NYSE:FDX) also increased to 49 from 46 quarter over quarter, while the value of their holdings increase by $685 million.

Hedge funds like Fedex these days because of its acquisition of TNT which they believe will result in a truly global parcel delivery operation. Southpoint Capital Advisors said the following about Fedex in its third quarter investor letter:

“The expanded footprint allows the company to improve the scale and density of the company’s European operations. While analyst commentary suggests the market is getting closer to our viewpoint on the TNT opportunity, we still think investors are overlooking an incredible opportunity to participate in the megatrend in e-commerce. We believe the growth in e-commerce over the next many years should outstrip the US Postal Service’s capacity and create extraordinary volume and pricing opportunities for the two private incumbents who have the capital and network effects to invest in this growth.“

Canadian Pacific Railway Limited (USA) (NYSE:CP) saw the number of funds managed by billionaires holding this stock inch up by 1 to during the third quarter. However, the value of their holdings declined by $571 million quarter over quarter. Amongst the billionaires we follow, Viking Global Investors managed by Andreas Halvorsen bought more than 2.6 million shares of this stock during the third quarter, making it the top buyer. Jorge Paulo Lemann of 3G Capital Partners also held 509,884 shares of Canadian Pacific Railway Limited (USA) (NYSE:CP) at September end. The company which is  attempting a consolidation of the US railway industry failed in its efforts, after both Norfolk Southern Corp. (NYSE:NSC) and CSX Corporation (NASDAQ:CSX) rebuffed the company’s offer for a potential merger. Canadian Pacific Railway Limited (USA) (NYSE:CP) reported good Q3 numbers, with earnings of $2.34 per share. The stock has returned more than 16% in the last six months and trades at a P/E of 20x. The number of hedge fund investors tracked by Insider Monkey with long positions in Canadian Pacific Railway Limited (USA) (NYSE:CP) increased by one to 32, and the aggregate value of their holdings also appreciated by $98.78 million during the third quarter.

Southwest Airlines Co (NYSE:LUV) found a place in the equity portfolios of 10 billionaires at the end of September, which held in aggregate $675 million worth of this stock. Amongst the billionaires we follow, Point72 Asset Management managed by Steve Cohen bought more than 1.4 million shares of this stock during the third quarter, making it the third largest buyer of Southwest Airlines Co (NYSE:LUV) stock. Israel Englander’ Millennium Management also increased Southwest Airlines Co’s (NYSE:LUV) stake in its portfolio to 0.14% from 0.11%, buying 876,968 shares during the quarter ending September. The stock has returned an astounding 533% over the last five years. The $29 billion passenger airline company was present in the portfolios of 53 hedge funds up from 45 in the earlier quarter. They held stock worth $2.29 billion accounting for 8% of the company’s float as of September 30.

Union Pacific Corporation (NYSE:UNP) witnessed an increase of 4 billionaires bullish on the company’s prospects, with 10 such funds holding stock worth $584 million. Millennium Management run by Israel Englander and Steve Cohen’s Point72 Asset Management were billionaire funds that we track, having Union Pacific Corporation (NYSE:UNP) in their portfolios. The stock has given a return of more than 340% to its shareholders over the last ten years and is trading very near to its 52 week high price currently. The company has a dividend yield of 2.39%. For its most recent quarter ending September, Union Pacific Corporation (NYSE:UNP) reported an increase of $400 million in revenues with a total sales of $5.17 billion. At the third quarter end, 62 funds that we track held shares worth $25 billion in this stock.

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