Miller Value Partners, an investment management firm, published its “Miller Opportunity Equity” fourth quarter 2021 investor letter – a copy of which can be seen here. A quarterly net decline of 4.29% has been recorded by the fund for the fourth quarter of 2021, compared to the S&P 500 Index’s 28.71% gain for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Miller Value Partners Opportunity Equity, in its Q4 2021 investor letter, mentioned Delta Air Lines, Inc. (NYSE: DAL) and discussed its stance on the firm. Delta Air Lines, Inc. is an Atlanta, Georgia-based airline company with a $25.4 billion market capitalization. DAL delivered a 1.66% return since the beginning of the year, while its 12-month returns are up by -2.93%. The stock closed at $39.73 per share on February 3, 2022.
Here is what Miller Value Partners Opportunity Equity has to say about Delta Air Lines, Inc. in its Q4 2021 investor letter:
“We’ve healed greatly from the worst days of the pandemic, and we expect that to continue going forward. We see the greatest disconnects between current market expectations and 18-months-out fundamentals in names like Delta Airlines (DAL).
Delta is a quality airline with shareholder-friendly management. It was the only one not to issue equity during the pandemic. It was also the only profitable airline in the second half of 2021. It generated positive operating cash flow despite business and international travel weakness. When earnings finally normalize, which the company doesn’t expect until 2024, it should earn more than $7/share. After bouncing significantly off the lows, DAL currently trades at $41.99 or less than 6x those earnings.
We’ve believed for over a decade that the US airlines are better businesses than they’ve historically been. Consolidation led to a more rational industry. These companies shifted from growth at any cost to a return on capital mindset, the importance of which can’t be understated. We previously believed a recession would finally demonstrate the group’s improved resilience.
Unfortunately, a global pandemic did exactly the opposite. Buffett, who bought the airlines after being a critic of their historical capital destruction, sold his airlines early in the pandemic due to the risk. The government offered support to the industry due to their national strategic importance, which we believe offers protection against another worst-case scenario. We still believe Delta is a better business than the market gives it credit for and one whose prospects will be materially different 18 months from now. As patient investors, you can expect us to hold tight.”
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Our calculations show that Delta Air Lines, Inc. (NYSE: DAL) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. DAL was in 50 hedge fund portfolios at the end of the third quarter of 2021, compared to 49 funds in the previous quarter. Delta Air Lines, Inc. (NYSE: DAL) delivered a -3.07% return in the past 3 months.
In January 2022, we published an article that includes DAL in the 10 Best Epicenter Stocks To Buy Now. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
