Changing planes. Druckenmiller cut his stake in US Airways Group, Inc. (NYSE:LCC) from about 4 million shares down to 1.2 million, and more than doubled the size of his position in Delta Air Lines, Inc. (NYSE:DAL) making that stock another of his ten largest holdings by market value. The much-derided airline industry has been on a tear in the last year, in part because investors expect US Airways Group, Inc. (NYSE:LCC)’s acquisition of American out of bankruptcy to result in higher prices. Both of these companies are valued at only 6 times consensus earnings for 2014, and while we don’t recommend buying any stock solely off of sell-side forecasts that is a low enough figure that we find Delta Air Lines, Inc. (NYSE:DAL) and US Airways at least somewhat interesting. Billionaire David Tepper’s Appaloosa Management has been bullish on airlines in the past (check out Tepper’s stock picks).
We’d be interested in doing more research on the airlines, though we would note that US Airways Group, Inc. (NYSE:LCC) does face integration risk from its acquisition. We’re not sure what has caused Merck & Co., Inc. (NYSE:MRK)’s financials to fall off, but we are certainly skeptical that it is any better a value than its peers when we look at the numbers. As for News Corp (NASDAQ:NWSA), while the stock is well above its levels from a year ago it apparently isn’t all that expensive in terms of the company’s fundamentals. It may be worth trying to determine how much upside the breakup could result in- it seems that the market is currently expecting very little.
Disclosure: I own no shares of any stocks mentioned in this article.