Is Delta Air Lines, Inc. (DAL) Going to Burn These Hedge Funds?

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Delta Air Lines, Inc. (NYSE:DAL) was in 68 hedge funds’ portfolio at the end of March. DAL has experienced an increase in enthusiasm from smart money lately. There were 62 hedge funds in our database with DAL holdings at the end of the previous quarter.

Delta Air Lines, Inc. (NYSE:DAL)

According to most traders, hedge funds are perceived as unimportant, old investment tools of the past. While there are greater than 8000 funds with their doors open at present, we choose to focus on the masters of this club, about 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total asset base, and by paying attention to their highest performing equity investments, we have unearthed a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as key, optimistic insider trading activity is a second way to parse down the stock market universe. There are lots of incentives for an executive to drop shares of his or her company, but just one, very simple reason why they would buy. Many empirical studies have demonstrated the useful potential of this strategy if you know what to do (learn more here).

With all of this in mind, it’s important to take a glance at the latest action regarding Delta Air Lines, Inc. (NYSE:DAL).

Hedge fund activity in Delta Air Lines, Inc. (NYSE:DAL)

At the end of the first quarter, a total of 68 of the hedge funds we track were long in this stock, a change of 10% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.

According to our comprehensive database, Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, holds the most valuable position in Delta Air Lines, Inc. (NYSE:DAL). Lansdowne Partners has a $576.9 million position in the stock, comprising 7.9% of its 13F portfolio. The second largest stake is held by Wayzata Investment Partners, managed by Patrick Halloran, which held a $565.4 million position; the fund has 62.1% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Crispin Odey’s Odey Asset Management Group, Paul Reeder and Edward Shapiro’s PAR Capital Management and Thomas E. Claugus’s GMT Capital.

As industrywide interest jumped, key money managers were breaking ground themselves. Odey Asset Management Group, managed by Crispin Odey, established the most outsized position in Delta Air Lines, Inc. (NYSE:DAL). Odey Asset Management Group had 223.6 million invested in the company at the end of the quarter. John Armitage’s Egerton Capital Limited also initiated a $60.1 million position during the quarter. The other funds with new positions in the stock are Sean Cullinan’s Point State Capital, Bruce J. Richards and Louis Hanover’s Marathon Asset Management, and Jean-Marie Eveillard’s First Eagle Investment Management.

What do corporate executives and insiders think about Delta Air Lines, Inc. (NYSE:DAL)?

Bullish insider trading is best served when the company in question has experienced transactions within the past six months. Over the last 180-day time frame, Delta Air Lines, Inc. (NYSE:DAL) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Delta Air Lines, Inc. (NYSE:DAL). These stocks are Spirit Airlines Incorporated (NASDAQ:SAVE), US Airways Group, Inc. (NYSE:LCC), China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA), China Southern Airlines Co Ltd (ADR) (NYSE:ZNH), and United Continental Holdings Inc (NYSE:UAL). All of these stocks are in the major airlines industry and their market caps match DAL’s market cap.

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