5 Best Airline Stocks To Buy Now

4. Alaska Air Group, Inc. (NYSE:ALK)

Number of Hedge Fund Holders: 30

Alaska Air Group, Inc. (NYSE:ALK) was founded in 1932 and is based in Seattle, Washington. The company provides passenger and cargo air transportation services, operating through three segments – Mainline, Regional, and Horizon. On October 20, Alaska Air Group, Inc. (NYSE:ALK) reported a Q3 non-GAAP EPS of $2.53 and a revenue of $2.83 billion, topping Street estimates by $0.14 and $10 million, respectively. The revenue increased 45.1% on a year-over-year basis. 

On October 21, Cowen analyst Helane Becker reiterated an Outperform rating on Alaska Air Group, Inc. (NYSE:ALK) but slashed the price target on the shares to $65 from $85. The analyst said that it is one of the first airlines to reach a labor agreement with its pilots and the higher wages will add 4 basis points to unit costs in Q4 2022.

According to Insider Monkey’s Q2 data, 30 hedge funds were long Alaska Air Group, Inc. (NYSE:ALK), with combined stakes worth $253.7 million. PAR Capital Management is the largest stakeholder of the company, with 1.7 million shares valued at $68.80 million. 

Here is what White Brook Capital has to say about Alaska Air Group, Inc. (NYSE:ALK) in its Q1 2021 investor letter:

“Despite initiating a position in the fourth quarter, Alaska Airlines Group, Inc (ALK) was sold during the first quarter. The Alaska Airlines investment was envisioned to be a long-term investment, but the stock price appreciated more quickly than expected. Like many other “re-open trades”, the value of the company including its debt now exceeds the value pre-pandemic. For that to be reasonable I’d have to believe:

1) The company/industry had too little debt and by adding debt they’ve better optimized their balance sheet for equity returns while still maintaining downside resiliency;

2) The company/industry’s profitability will be better moving forward than it was pre-pandemic and therefore warrant a higher multiple; and/or

3) The company/industry was significantly mispriced before the pandemic.

The first was true of Alaska Airlines pre-pandemic, but the certainty one can have about the second and third is not high enough to compel continued investment at today’s prices. The intended long-term position turned into a short-term trade with an exceptional IRR.”