United Continental Holdings Inc (NYSE:UAL)’s consolidated passenger revenue totaled $32.79 billion in 2015, down by $977 million or 2.9% year-over-year due to a lower consolidated yield. Indeed, yields were mainly impacted by toughening competition in the domestic fare environment, the strengthening of the U.S dollar, and travel reductions from corporate customers in the energy sector. However, yields were positively affected by a 1.5% year-over-year increase in traffic. The company’s 2015 total aircraft fuel purchase cost, excluding fuel hedge impacts, decreased substantially in 2015, to $6.92 billion from $11.59 billion a year earlier. Nonetheless, United Continental’s fuel hedging activity materially impacted the company’s overall fuel expense incurred last year. Moreover, the company’s management anticipates that a one dollar change in the price of a barrel of crude oil would impact its annual fuel expense by roughly $94 million in 2016. It should also be noted that the carrier’s passenger revenue per available seat mile, or PRASM, decreased by 4.4% year-over-year. Meanwhile, the stock is priced at 6.37-times expected 2017 earnings, significantly below the forward P/E ratio of 16.55 for the S&P 500 benchmark.
How have hedgies been trading United Continental Holdings Inc (NYSE:UAL)?
At Q4’s end, a total of 73 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 4% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or had already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Altimeter Capital Management has the biggest position in United Continental Holdings Inc (NYSE:UAL), worth close to $610.2 million, accounting for 33.4% of its total 13F portfolio. The second largest stake is held by PAR Capital Management, with a $368.1 million position; 6.8% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions consist of Cliff Asness’ AQR Capital Management, Thomas E. Claugus’ GMT Capital, and Donald Chiboucis’ Columbus Circle Investors.
As one would reasonably expect, key hedge funds have jumped into United Continental Holdings Inc (NYSE:UAL) headfirst. Marianas Fund Management, managed by Will Snellings, assembled the most valuable position in United Continental Holdings Inc (NYSE:UAL). Marianas Fund Management had $74.3 million invested in the company at the end of the quarter. Mike Masters’ Masters Capital Management also initiated a $57.3 million position during the quarter. The other funds with new positions in the stock are James Dinan’s York Capital Management, Rob Citrone’s Discovery Capital Management, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.
Let’s now head to the final page of this article, where we discuss the hedge fund activity in other companies with market capitalizations close to United Continental’s.
