UTA's new, largest institutional investor is not your average hedge fund.
PAR Capital is UTA's top institutional owner based on their recent purchase of a nearly 5% stake, or 990,000 shares now valued at $6,147,900.
PAR's investment in UTA is noteworthy because PAR is a $2.18 Billion value fund that specializes in the travel industry. They were founded in 1990 by two former airline analysts, Paul Reeder & Edward Shapiro, who previously worked for Loomis Sayles & Co. and Wellington Management.
They are known for taking a longer term, value-oriented view toward their investments as evidenced by their multi-year US Airways position (making them at one time the largest shareholder) bought for $19.53 and sold for $57.80 in 2007 for a 3-bagger.
PAR's top 5 holdings account for nearly half of their $2 Billion investments:
PAR Capital are experts in this space and have a incredible track record. They tend to buy large positions at value prices and hold for multiyear, multibaggers. I suspect they invested in UTA near the lows in September and will hold for a gain of a 3-4 multiple of their purchase price, just like they did with US Airways (LCC).
What is very significant to me is not only the large investment in UTA, but the fact that PAR has NOT invested in any other China travel plays. The top travel sector fund has chosen UTA as their pick to tap into the growing China travel sector over larger players like CTRP and LONG.
But this investment choice of UTA makes sense in relation to PAR's top holding, Priceline. UTA and Priceline's Agoda established a partnership in 2010 to expand PCLN's reach into China to better compete with Expedia (and their partnership with LONG).
Another obvious reason why PAR chose UTA as their #1 China travel play is the tremendous value price. UTA meets PAR's value requirement by trading at a 2010 P/E of 4 based on company EPS guidance of $1.40 compared to its peers CTRP which trades at a 2010 P/E of 45 on analyst consensus EPS of $.99, and LONG which trades at a 2010 P/E of 128 on analyst consensus EPS of $.14.
I don't think it would be an overstatement to say that PAR Capital is the smartest money in the travel sector. Their investment in UTA is enough to get many investors' attention, including mine.
Disclosure: I am long UTA.