Delta Air Lines, Inc. (DAL): Book a Ticket on This Growing Airline

Hedge Funds, also ‘bullish’

A total of 68 hedge funds were long in Delta Airlines stock at the end of the first quarter, up from 62 in the previous quarter.

Some of the hedge funds that have valuable position in the airline company are Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, Wayzata Investment Partners, managed by Patrick Halloran, Crispin Odey’s Odey Asset Management Group, Paul Reeder and Edward Shapiro’s PAR Capital Management and Thomas E. Claugus’s GMT Capital.

Short interest rising

The short interest is a very good indicator of the expectations regarding the price of a stock. For Delta, short interest was up 18% to 17.3 million shares. An important point to note here is that, last month the short interest gained 26%. The increase in a short position reflects that traders and analysts expect the stock price to come down.

Making investors happy

After a decade-long break, Delta Air Lines, Inc. (NYSE:DAL) plans to return $1 billion to investors in the form of share repurchase and dividend. The company last paid a dividend in 2003 and hasn’t repurchased stock since 2000.

Half of the amount will be returned in the form of buyback over the next three years while the remaining will be paid via quarterly dividend of $0.06 a share. Delta is the only full-service U.S. carrier with either a buyback program or dividend.

Opinion

Delta Airlines looks well poised owing to a number of strategic initiatives including route launches, improving airport terminals and fleet structures, and intelligent acquisitions. A new five-year plan is expected to work well for the company, enhancing revenue and at the same time keeping investors happy with dividends and a share buyback. Also, while some hedge funds and analyst are bullish on the stock, an increase in short interest does raise a slight concern.

All these factors do make the stock an attractive investment; however, investors must consider the risks including fuel, labor troubles, and the political and federal environment before initiating a position.

The article Book a Ticket on This Growing Airline originally appeared on Fool.com and is written by Rahul Jaiswal.

Rahul Jaiswal has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Rahul is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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