Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message|
( followers)  

Paul Reeder founded Par Capital in 1990 after graduating with a master’s degree from MIT’s Sloan School of Management and cutting his teeth as an airline analyst at Loomis Sayles & Co. Reeder manages Par Capital with Edward Shapiro, who joined the firm in 1997 after getting an MBA from UCLA and spending eight years as Vice President of Wellington Management. Par Capital focuses its investments primarily on travel and online media.

During the second quarter, Par Capital Management outperformed the S&P 500 by almost 3 percentage points (see Par Capital’s market-beating stock picks). However, its performance since June has been less than impressive. Par Capital Management’s 13F portfolio lost around 12.6% since June while the S&P 500 lost just 10.7% over the same period.

Company

Ticker

Value (x1000)

Activity

Return Since June

Priceline.com Inc.

(NASDAQ:PCLN)

422,810

-2%

3%

UnitedHealth Group

(NYSE:UNH)

285,475

-5%

-11%

United Continental

(NYSE:UAL)

251,432

-5%

-20%

Expedia Inc.

(NASDAQ:EXPE)

172,818

35%

1%

Southwest Airlines Co.

(NYSE:LUV)

147,416

-56%

-28%

Dollar Thrifty Automotive

(NYSE:DTG)

141,345

0%

-12%

Avis Budget Group Inc.

(NASDAQ:CAR)

133,891

5%

-28%

Penn National Gaming

(NASDAQ:PENN)

87,562

5%

-6%

AMR Corp Del

(AMR)

82,698

122%

-37%

Ameristar Casinos Inc.

(NASDAQ:ASCA)

61,398

-37%

-24%

Orbitz Worldwide Inc.

(NYSE:OWW)

61,267

0%

3%

ARM Holdings PLC

(NASDAQ:ARMH)

48,686

0%

-6%

Pinnacle Entertainment

(NYSE:PNK)

42,746

0%

-18%

Churchill Downs Inc.

(NASDAQ:CHDN)

35,347

22%

-10%

Boyd Gaming Corp.

(NYSE:BYD)

31,462

0%

-35%

jetblue Airways Inc.

(NASDAQ:JBLU)

30,323

0%

-33%

Bally Technologies Inc.

(NYSE:BYI)

28,565

-72%

-28%

Alaska Airgroup Inc.

(NYSE:ALK)

28,498

New

-21%

Lam Resh Corp.

(NASDAQ:LRCX)

26,125

7%

-18%

Allegiant Travel Co.

(NASDAQ:ALGT)

25,377

0%

-8%

Medcath Corp.

(NASDAQ:MDTH)

22,179

-1%

2%

Oracle Corp.

(NYSE:ORCL)

21,424

0%

-18%

Hertz Global Holdings

(NYSE:HTZ)

19,332

0%

-35%

United Rentals Inc.

(NYSE:URI)

18,161

0%

-39%

Apple Inc.

(NASDAQ:AAPL)

17,791

0%

11%

Par Capital lost 37% through its position in AMR Corp (AMR) after increasing his position in the company by 122% last quarter. Par Capital also lost big in travel industry positions. It lost 35% in its Hertz Global Holdings (HTZ) position, 33% in JetBlue Airways Corp (JBLU), 28% in Avis Budget Group Inc (CAR) and 28% in Southwest Airlines Co (LUV).

While Par Capital wasn’t the only hedge fund to lose so much on travel (for instance, see Bridger Management’s top picks), its focus on travel stocks made it more vulnerable to travel-related losses. However, the landslide may be temporary if market movement is any indicator. For instance, last quarter saw several big hedge funds increase positions in Hertz, including James Dinan of York Capital Management, (Click here for a list of top hedge funds with HTZ positions.)

Of Par Capital’s top 25 stock picks, only Apple Inc (AAPL) had a double-digit positive return; it returned 14% since June. However, 9 of Par Capital’s top 25 picks outperformed the market since the end of the second quarter, including its largest position, Priceline.com Inc (PCLN), which gained a modest 3% since June. Priceline is a top pick for several hedge funds right now, including Patrick McCormack’s Tiger Consumer Fund (check Pat McCormack’s top picks). Expedia (EXPE) also outperformed the market by 12 percentage points since June.

We like Reeder and Shapiro but caution investors against mirroring the duo’s entire portfolio. Although they have produced strong returns over the long run, any time a hedge fund is centered on one industry it loses some of the advantages of diversification and takes on more risk. While greater risk can translate into greater rewards, it can also mean greater losses. We think it’s a better strategy to imitate the top stock picks of top hedge funds. Even though Par Capital underperformed the market during the past two months, Paul Reeder’s top 4 stock picks actually outperformed.

Source: Par Capital's Top 25 Stock Holdings