Tipp Hill More Bullish Than Ever On Airline Stocks

#2 American Airlines Group Inc (NASDAQ:AAL)

Shares held (as of September 30): 165,000
Total Value (as of September 30): $6.41 million
Percent of Portfolio (as of September 30): 6.56%

American Airlines Group Inc (NASDAQ:AAL) is a hedge fund favorite, but is down by 16.5% year-to-date on oversupply concerns. Analysts are worried that the industry is expanding capacity faster than GDP, and that the additional capacity will put pressure on prices and lower the revenue per available seat mile. American Airlines Group is certainly not beyond cutting prices, as it has been pricing fares below cost on some routes to drive low-cost airlines such as Spirit Airlines Incorporated (NASDAQ:SAVE) out of the market. Still, given the big stock buybacks, American Airlines is cheap at seven-times forward earnings. Tipp Hill buffed its position in American Airlines by 50% during the third quarter.

#1 Delta Air Lines, Inc. (NYSE:DAL)

Shares held (as of September 30): 220,000
Total Value (as of September 30): $9.87 million
Percent of Portfolio (as of September 30): 10.11%

Because of a stronger U.S economy and low crude prices, airlines have done well since 2012. Delta Air Lines, Inc. (NYSE:DAL) has quintupled in value, from $10-a-share in 2012 to over $50-a-share today, as airlines have merged and become more profitable.  With a forward P/E of 8.85, Delta Air Lines’ shares are still historically undervalued, although they are up by just 2.9% year-to-date. Paul Ruddock and Steve Heinz‘s Lansdowne Partners owns 26.55 million shares.

If you would like to do more research on additional airlines, you might find this article on the most profitable airlines in the world helpful.

Disclosure: None