Is The Boeing Company (BA) Back on Track?

Embraer
is a Brazil-based holding company primarily engaged in the manufacture of aircrafts. However, the industry is largely dominated by Boeing and Airbus, both of which have more established operations and brand names. Not unlike Boeing, Embraer is susceptible to large earnings impacts due to order cancellations; however, I take solace in the fact that Boeing has a much broader customer base.

Embraer’s loss of its Delta Airlines contract in late 2012 was a big blow to the company. The order was for 40 regional jets and an option for 30 more. However, the stock is relatively flat over the last twelve months, despite missing earnings by at least 20% in each of the last four quarters. What’s more is that with an 18.2 times P/E, Embraer trades in line with Boeing, but I don’t think it deserves to.

While The Boeing Company (NYSE:BA) had 41 hedge funds long the stock, Embrarer had only 8 at year’s end, which was a 27% decrease in hedge fund owners from the third quarter. The notable hedge funds dumping their stock last quarter include Arrow Street, who sold off their $10.3 million investment in the stock, and billionaire Israel Englander followed suit, dumping about $4 million worth.