When it comes to investing in public equities, airline companies are currently enjoying a high level of popularity amongst billionaire investors. After gaining almost 100% on average in 2013, airline stocks once again beat the S&P500 by a large margin last year. Although the whole industry has been performing well, aided by the sharp reduction in fuel costs, shares of some these companies were particularly sought after last quarter. The five most popular airline stocks amongst billionaire investors and their respective hedge funds last quarter were: Delta Air Lines, Inc. (NYSE:DAL), American Airlines Group Inc (NASDAQ:AAL), United Continental Holdings Inc (NYSE:UAL), Southwest Airlines Co (NYSE:LUV), and Alaska Air Group, Inc. (NYSE:ALK).
Among the funds we track, more than 120 firms disclosed ownership of a stake in Delta Air Lines, Inc. (NYSE:DAL) last quarter, including billionaire Rob Citrone’s Discovery Capital Management, and 12 other billionaires. Citrone’s fund entered a new position in the company, disclosing a stake of 2.33 million shares in its last 13F filing. Considering the stock gained 81% last year, it comes as little surprise to see Mr. Citrone take a bullish stance towards Delta Air Lines, Inc. (NYSE:DAL). Furthermore, the company reported fourth quarter earnings of $0.78 per share, beating the earnings consensus estimate for the eighth consecutive quarter. Given the current circumstances, it comes as no surprise that Delta is on the shopping list of numerous billionaire investors.
American Airlines Group Inc (NASDAQ:AAL) was also popular amongst billionaire investors last quarter, as the company that was formed by the merger between American Airlines and US Airways also had 13 billionaire investors with a total of $1.96 billion invested. Since the beginning of 2014 until the end of last week, the stock has gained around 104%, and was trading at $51.31 per share after Monday’s closing bell. Although the world’s largest global carrier delivered great returns last year, things might be different this quarter and the following. In addition to cutting projected first-quarter margins this month, American Airlines Group Inc (NASDAQ:AAL) has been downgraded to “hold” by numerous analysts. Nevertheless, billionaire George Soros seems optimistic, as his firm Soros Fund Management owns a stake of 3.27 million shares in the company. Rob Citrone also holds a position in American Airlines, which amounts to 2.64 million shares.
Another popular stock is United Continental Holdings Inc (NYSE:UAL), which is held by 95 firms amongst the funds we track, and by 11 billionaires. Billionaire Ken Griffin is betting on the company, holding a position of 836,200 shares through his fund Citadel Advisors. United Continental Holdings Inc (NYSE:UAL) was not only popular, but also very profitable last year as a stock, with share prices gaining more than 81% throughout the year. Furthermore, analysts at Zacks Investment Research upgraded the stock to “strong buy” at the end of 2014. The optimism stems from the company’s future plans regarding increasing connectivity to destinations in Italy, as well as from the carrier’s earnings record for the past four quarters.
Southwest Airlines Co (NYSE:LUV) experienced huge growth last year, as the stock gained 125% during the past 12 months. After the long integration process of AirTran Airways, a carrier that was acquired in 2011, was finally completed, the company is now enjoying the resulting positive synergies. New international destinations have allowed the company to grow considerably, while enjoying great future prospects, and increased popularity amongst billionaire investors, of which there were 8. Rob Citrone is also bullish regarding Southwest Airlines Co (NYSE:LUV), as his fund owns just over 1.35 million shares. Yet the stock is even more popular with billionaire hedge fund manager Jim Simons, whose firm increased its stake in the company by 116% last quarter, bringing its total holding to just over 2.0 million shares. Despite reducing their exposure to the stock last quarter, both Ken Griffin and D.E. Shaw continue to hold positions in Southwest.
Despite achieving the worst returns amongst the five stocks discussed, shares of Alaska Air Group, Inc. (NYSE:ALK) continue to be sought after by billionaire investors and hedge funds, of which there were 8 at the end of the year. The company counts Jim Simons’ Renaissance Technologies among its backers, as the quantitative analysis fund owned 7.81 million shares and was the company’s largest institutional investor among the funds we track. Although Alaska Air Group, Inc. (NYSE:ALK) only gained 66% last year and is the smallest of the five companies presented in this article, the company not only has plenty of room to continue growing, but has also been delivering great earnings.
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