Par Capital is a Boston-based private investment partnership that focuses mainly on travel and online media industries and manages more than $2.5 billion in assets. Paul Reeder, 48 years old, started the hedge fund in 1990. Prior to founding Par Capital, Mr. Reeder worked as an airline analyst at Loomis Sayles & Co. Mr. Reeder holds a master’s degree from MIT’s Sloan School of Management and currently serves as President and Director at Par Capital.
In 1997, Edward Shapiro, 45, joined the fund. Before joining Par Capital, Mr. Shapiro served as Vice President of Wellington Management Company between 1990 and 1997. Mr. Shapiro earned a BS in economics from the University of Pennsylvania’s Wharton School of Business in 1986 and an MBA from UCLA’s Anderson School of Management in 1990 and currently serves as VP and Partner at Par Capital.
According to the latest 13F, Par Capital had $2.8 billion in assets. Below is a table that shows some recent major activities of Par Capital as of March 31st, 2011:
CompanyName | Ticker | Value | Activity | Return |
ADDUS HOMECARE CORP |
| Sold Out | 8% | |
CAPITOL FEDERAL FINANCIAL |
| Sold Out | 5% | |
EL PASO CORP | EP |
| Sold Out | 12% |
GENOPTIX INC |
| Sold Out | #N/A | |
HUMANA INC |
| Sold Out | 16% | |
NASDAQ O M X GROUP INC |
| Sold Out | -2% | |
OCLARO INC |
| Sold Out | -42% | |
PRICELINE COM INC | 425,922 | 0% | 1% | |
SOUTHWEST AIRLINES CO | 374,147 | 119% | -10% | |
UNITED CONTINENTAL | 267,532 | -22% | -2% | |
UNITEDHEALTH GROUP INC | 263,041 | -1% | 14% | |
AVIS BUDGET GROUP INC | 133,306 | 26% | -5% | |
DOLLAR THRIFTY AUTO | 127,908 | -13% | 11% | |
EXPEDIA INC | 99,849 | 2% | 28% | |
BALLY TECHNOLOGIES INC | 93,722 | 18% | 7% | |
ORBITZ WORLDWIDE INC | 87,840 | 0% | -30% | |
PENN NATIONAL GAMING | 76,803 | 6% | 9% | |
AMERISTAR CASINOS INC | 73,200 | -1% | 34% | |
A R M HOLDINGS PLC | 48,241 | 0% | 1% | |
A M R CORP DEL | AMR | 44,483 | New | -16% |
B G C PARTNERS INC | 41,494 | 0% | -15% | |
PINNACLE ENTERTAINMENT | 39,074 | 10% | 9% | |
BOYD GAMING CORP | 33,885 | 7% | -7% | |
JETBLUE AIRWAYS CORP | 31,168 | 0% | -3% | |
LAM RESH CORP | 31,163 | 255% | -22% | |
DELTA AIR LINES INC | 27,685 | New | -6% | |
CHURCHILL DOWNS INC | 26,699 | 1% | 9% | |
UNITED RENTALS INC | 23,795 | 1% | -24% | |
MEDCATH CORPORATION | 23,019 | 14% | -3% | |
ALLEGIANT TRAVEL CO | 22,460 | 0% | 13% | |
ORACLE CORP | 21,765 | 0% | -1% | |
HERTZ GLOBAL HOLDINGS | 19,028 | 0% | 2% | |
APPLE INC | 18,471 | 0% | -4% | |
MELCO CROWN ENTERTAI | 18,335 | 1% | 68% | |
ISLE OF CAPRI CASINOS | 18,057 | 17% | -7% |
Par Capital sold some of its long positions during the first quarter of 2011. Although Par Capital missed out on some return opportunities, the positions that were sold out were rather small compared with the overall portfolio value. The biggest sale was Genoptix (GXDX), valued at $10 million on December 31, 2010. All the other stocks that Par Capital sold out had values less than $2 million at the end of 2010.
Almost 15% of Par Capital’s portfolio is parked at Priceline.com (PCLN) and no new activity is reported since the previous quarter (4Q2010). We see John Hurley’s Cavalry Asset Management and John Taler’s Jat Capital Management being bullish on the stock during 1Q2011, raising their stakes by 78% and 19%, respectively. The stock returned 1% since the end of March.
Southwest Airlines (LUV) was a major disappointment for Par Capital, where it doubled its stake during the first quarter of the year and invested about 13% of its portolio. The stock returned negative 10% during second quarter. Ken Heebner’s Capital Growth Management and Jeffrey Vinik’s Vinik Asset Management were among the major funds that were disappointed with the performance of Southwest.
Another bad bet for Par Capital was Avis Budget Group (CAR) where it chose to increase stakes by 26%. The stock returned negative 5% since the end of March. Doug Silverman’s Senator Investment Group also followed the same path with Par Capital and increased its stakes by 25% during the first quarter of 2011. Both funds held around 7.5 million shares of Avis each as of March 31.
Par Capital also got disappointed with some of the new securities it added to its portfolio during the first quarter of 2011. The fund was bullish for AMR Corp (AMR) and Delta Airlines (DAL) and took long positions in both stocks. Both stocks generated negative returns since the end of March. Jeffrey Altman’s Owl Creek Asset Management bought over $100 million worth of AMR Corp during the first quarter of 2011, and it too was disappointed with the stock’s negative 16% return since then. Robert Bishop’s Impala Asset Management and Ken Heebner’s Capital Growth Management were among the funds that added Delta shares onto their portfolios during the first quarter of 2011. The stock returned a negative 6% since the end of the first quarter.
Nevertheless Par Capital’s value weighted returns for all these stocks were 1.6% during the second quarter. Par Capital’s large-cap stock holdings that are constituents of S&P 500 index also returned 2.9% during the second quarter, beating the S&P 500’s 0.1% return. This result placed it 64th among 300+ hedge funds we are tracking.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
