At Insider Monkey, we track more than 700 hedge funds and analyze their top stock positions every quarter, including their latest purchases and the positions they’ve sold out of. This allows us to identify the most popular stock choices of hedge fund managers in different sectors. In this article, we’ll focus on the top transportation stocks among the funds in our database, and find out who is investing in them and why. The stocks under consideration include Delta Air Lines, Inc. (NYSE:DAL), American Airlines Group Inc (NASDAQ:AAL), United Continental Holdings Inc (NYSE:UAL), Union Pacific Corporation (NYSE:UNP), and United Parcel Service, Inc. (NYSE:UPS).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 118% over the last 35 months, which is more than 60 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
5. United Parcel Service, Inc. (NYSE:UPS)
Investors with Long Positions (as of June 30): 52
Aggregate Value of Investors’ Holdings (as of June 30): $2.15 Billion
United Parcel Service, Inc. (NYSE:UPS) stands at number five on our list of top transportation stocks held by hedge funds. Among the hedge funds we track, long positions in the company rose from 45 in the previous quarter, whereas aggregate holdings were up by 2.9% during the same period. The shares of United Parcel Service, Inc. (NYSE:UPS) were down very marginally during the second quarter, by 0.03%. The delivery service company completed the acquisition of Coyote Logistics, a third-party logistics service provider, on August 18 for $1.8 billion. Greenhaven Associates, led by Edgar Wachenheim, was the largest shareholder of United Parcel Service, Inc. (NYSE:UPS) in our database at the end of the second quarter, holding 4.81 million shares valued at $466.47 million. The Bill & Melinda Gates Foundation Trust had 4.53 million shares of the company in its own portfolio.
4. Union Pacific Corporation (NYSE:UNP)
Investors with Long Positions (as of June 30): 64
Aggregate Value of Investors’ Holdings (as of June 30): $1.69 Billion
Union Pacific Corporation (NYSE:UNP) has had a rough year so far, with its shares losing 31.28% of their value year-to-date. The hedge funds in our database cut their aggregate holdings in the railroad company by 27.50% in comparison with the previous quarter. The shares of Union Pacific Corporation (NYSE:UNP) were down by 11.95% during the same period, affecting some but not even half of the decrease in aggregate value. Declining coal revenues have had a negative impact on the railroad company throughout the year, including weak second quarter results. Union Pacific Corporation (NYSE:UNP) reported earnings per share of $1.38 over operating revenues of $5.4 billion for its second quuarter. The EPS was better than the market’s estimate of $1.34, whereas the revenue fell short of analysts’ expectations of $5.6 billion. Jim Simons’ Renaissance Technologies was the top shareholder of Union Pacific Corporation (NYSE:UNP) in our database, possessing 2.02 million shares with a market value of $192.78 million.
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
United Continental Holdings Inc (NYSE:UAL) is another transportation company facing a tough business environment, with its shares declining by 20.77% year-to-date. Hedge fund ownership was down by six in comparison to the first quarter, while aggregate holdings declined by 18% during the same period. However, the decline in aggregate holdings could be completely attributed to the falling share price in this case, as the shares of United Continental Holdings Inc (NYSE:UAL) fell by 21.17% during the second quarter. United Airlines announced its July 2015 operational performance on August 10, reporting growth of 2.8% in revenue passenger miles (RPM) and 2.4% growth in available seat miles year-over-year. GMT Capital, led by Thomas E. Claugus, was the top shareholder of United Continental Holdings Inc (NYSE:UAL) in our database, having a position worth $358.99 million from 6.77 million shares. Daniel S. Och’s OZ Management was another major shareholder of the company, holding 6.70 million shares in its portfolio.
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): $2.55 Billion
American Airlines Group Inc (NASDAQ:AAL) comes in at number two in the list of top transportation stock holdings of hedge funds in our database. Despite retaining the number two spot, the airline has suffered in 2015 much like its peers. Its shares are down by 29.58% year-to-date and were down by 24.34% during the second quarter. The decline in share value during the quarter ending on June 30 contributed to an overall drop of 37.42% in aggregate holdings against the previous quarter. American Airlines Group Inc (NASDAQ:AAL) reported mixed second quarter financial results on July 24, with earnings per share of $2.62, excluding special net charges, over revenues of $10.8 billion. Its EPS was better than the market’s estimate of $2.59, whereas its revenue came in marginally shorter than the $10.9 billion estimated figure. York Capital Management, led by James Dinan, held a large position in American Airlines Group Inc (NASDAQ:AAL) on June 30 of 8.13 million shares valued at $324.58 million.
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): $6.99 Billion
Delta Air Lines, Inc. (NYSE:DAL) topped the list of the most popular transportation stocks among hedge funds. It ranked number six in Insider Monkey’s most popular stocks list for the second quarter, with 114 hedge funds having ownership of the stock on June 30. That was down by two against the previous quarter, with a 2% decline in aggregate hedge fund holdings. The shares of Delta Air Lines, Inc. (NYSE:DAL) dropped by 8.63% during the second quarter, indicating that the hedge funds made additional purchases in the specified period. The airliner recently announced buying a 3.55% stake in China Eastern Airlines, helping it improve its exposure to the Asian markets. Lansdowne Partners was the largest shareholder of Delta Air Lines, with 26.55 million shares, followed by Iridian Asset Management holding 13.07 million shares of the airline.
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