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In this article, via an analysis (based on the latest available institutional 13-F filings) of the investing activities of the world's largest fund managers managing between $100 billion and over a trillion dollars, in airline and air travel service stocks, we aim to identify the ones that these mega fund managers are most bullish and bearish about. The list includes prominent managers such as Wellington Management ($1.6 trillion in total assets under management), Vanguard Group ($1.4 trillion), Fidelity Investments ($640 billion), T Rowe Price ($330 billion), and Goldman Sachs Asset Management ($580 billion), among others.

We determined based on our analysis that mega fund managers are bearish on the airline and air travel service companies. During the June quarter, these mega fund managers together cut a net $989 million from their $47.89 billion prior quarter position in the group, selling $4.11 billion and buying $3.12 billion worth of stocks in the group.

The following are the airline and air service related companies that these mega fund managers are most bearish about (see Table):

Boeing Co. (BA): BA is among the world’s largest manufacturers of passenger aircraft, and it is the largest exporter by value in the U.S. Besides passenger or commercial aircraft, BA is also a leading player in the aerospace and defense group, manufacturing military aircraft, missiles, and information and communication systems. Mega funds cut a net $511 million from their $15.64 billion prior quarter position, and taken together mega funds hold 31.0% of the outstanding shares, approximately at par with their 30.1% weighting in the group. The top sellers were Goldman Sachs Asset Management ($469 million), Neuberger Berman Group ($181 million), Capital World Investors ($123 million) and Janus Capital Management ($121 million). Overall, 973 institutions hold 71.3% of BA shares, with Evercore Trust Company ($5.43 billion), Capital World Investors ($3.02 billion) and State Street Corp. ($2.07 billion) being the largest holders with 11.0%, 6.1% and 4.2% of the outstanding shares respectively.

Priceline.com Inc. (PCLN): PCLN, the pioneer of name-your-own price service, is a diversified online travel services company. It provides airline ticket, hotel room, car rental, vacation package and cruise services through Priceline.com. Mega funds cut a net $341 million from the $11.05 billion prior quarter position, and taken together mega funds hold 40.1% of the outstanding shares, significantly greater than their 30.1% weighting in the group. The top sellers were Morgan Stanley ($375 million) and Goldman Sachs Asset Management ($109 million. Overall, 591 institutions hold PCLN shares, with T Rowe Price ($1.35 billion), Fidelity Investments ($1.32 billion) and Marisco Capital Management ($1.11 billion) being the largest holders with 5.3%, 5.2% and 4.4% of the outstanding shares respectively.

Expedia Inc. (EXPE): EXPE is one of the largest online travel companies in the world, and provides travel products and services to leisure and corporate travelers, offline retail travel agents, and travel service providers through a portfolio of brands, including its flagship Expedia.com website, and also Hotels.com, Hotwire.com, Venere, TripAdvisor.com, Classic Vacations, Expedia Local Expert, and Egencia. Mega funds cut a net $535 million from their $2.65 billion prior quarter position, and taken together mega funds hold 27.1% of the outstanding shares, less than their 30.1% weighting in the group. The top sellers were T Rowe Price ($324 million) and Fidelity Investments ($141 million). Overall, 427 institutions hold 85.5% of EXPE shares, with Capital World Investors ($478 million) and Vanguard Group ($301 million) being the largest holders with 6.9% and 4.3% of the outstanding shares respectively.

Southwest Airlines Co. (LUV): LUV provides predominantly short-haul, high-frequency, point-to-point, low-fare domestic airline service to 69 cities in 35 states. Mega funds cut a net $7 million from their $2.56 billion prior quarter position, and taken together mega funds hold 37.6% of the outstanding shares, higher than their 30.1% weighting in the group. The top sellers were Wellington Capital Management ($142 million) and Janus Capital Management ($23 million). Overall, 481 institutions hold 83.7% of LUV shares, with Capital Research Global Investors ($758 million), PRIMECAP Management ($675 million) and T Rowe Price ($408 million) being the largest holders with 11.6%, 10.3% and 6.2% of the outstanding shares respectively.

AMR Corp. (AMR) provides air transportation for passengers to 160 destinations in North and South America, Europe and Asia. It also operates as a scheduled air freight carrier, providing a range of freight and mail services to shippers. Mega funds cut a net $25 million from their $316 million prior quarter position, and taken together mega funds hold 36.5% of the outstanding shares, higher than their 30.1% weighting in the group. The top seller was Capital Research Global Investors ($26 million). Overall, 227 institutions hold 65.7% of AMR shares, with PRIMECAP Management ($99 million), Capital World Investors ($60 million) and ICC Capital Management ($51 million) being the largest holders with 12.4%, 7.6% and 6.3% of the outstanding shares respectively.

Republic Airways Holdings (RJET) is a holding company for Chautauqua Airlines, Frontier Airlines, Republic Airlines and Shuttle America offering 1,600 flights daily to 133 cities. Mega funds cut a net $10 million from their $47 million prior quarter position, and taken together mega funds hold 22.6% of the outstanding shares, significantly less than their 30.1% weighting in the group. The top seller was Janus Capital Management ($7 million) and Oppenheimer Funds ($2.5 million). Overall, 117 institutions hold 76.7% of RJET shares, with Donald Smith & Co. ($13 million), Fidelity Investments ($10 million), Dimensional Fund Advisors ($10 million), Greenlight Capital ($9 million) and Corsair Capital Management ($8 million) being the largest holders with 9.9%, 7.9%, 7.6%, 7.1% and 6.1% of the outstanding shares respectively.

JetBlue Airways Corp. (JBLU): JBLU provides passenger airline service to 63 destinations in 21 states, Puerto Rico, and Mexico; and 10 countries in the Caribbean and Latin America. Mega funds cut a net $82 million from their $610 million prior quarter position, and taken together mega funds hold 41.5% of the outstanding shares, significantly greater than their 30.1% weighting in the group. The top seller was Goldman Sachs Asset Management ($77 million). Overall, 210 institutions hold 84.9% of JBLU shares, with Fidelity Investments ($189 million), Donald Smith & Co. ($127 million), PRIMECAP Management ($81 million) and Morgan Stanley ($73 million) being the largest holders with 14.8%, 9.9%, 6.3% and 5.7% of the outstanding shares respectively.

Ryanair Holdings Plc ADR (RYAAY) is an Irish passenger airline serving over 1,300 scheduled short-haul point-to-point flights throughout Europe and Morocco. Mega funds cut a net $109 million from their $1.72 billion prior quarter position, and taken together mega funds hold 18.1% of the outstanding shares, significantly lower than their 30.1% weighting in the group. This is understandable as RYAAY being Europe-based most likely has a significant number of Europe and Asia-based institutions holding company stock. The top sellers were Capital World Investors ($59 million) and Royal Bank of Canada ($30 million). Overall, 138 institutions hold 38.9% of RYAAY shares, with Capital Research Global Investors ($796 million), Capital World Investors ($610 million) and Manning & Napier Advisors ($448 million) being the largest holders with 9.4%, 7.2% and 5.3% of the outstanding shares respectively.

The following are the airline and air service related companies that these mega fund managers are most bullish about (see Table):

Delta Air Lines Inc. (DAL) provides international and domestic passenger and cargo transportation in the U.S. and abroad, offering services to 357 destinations in 66 countries. Mega funds added a net $78 million to their $2.81 billion prior quarter position, and taken together mega funds hold 42.0% of the outstanding shares, significantly more than their 30.1% weighting in the group. The top buyers were Wellington Capital Management ($67 million) and Capital World Investors ($42 million), and the top holders were Wellington Capital Management ($418 million), Janus Capital Management ($388 million) and AllianceBernstein ($362 million). Overall, 406 institutions hold 83.7% of DAL shares, with Wellington Capital Management, Janus Capital Management and AllianceBernstein being the largest holders with 6.4%, 6.0% and 6.0% of the outstanding shares respectively.

United Continental Holdings (UAL) provides air transportation for passengers, freight and mail with over 5,675 flights daily to over 372 airports on 6 continents. Mega funds added a net $172 million to their $3.28 billion prior quarter position, and taken together mega funds hold 57.0% of the outstanding shares, significantly more than their 30.1% weighting in the group. The top buyers were Capital World Investors ($117 million) and Capital Research Global Investors ($81 million). The top holders were Janus Capital Management ($620 million), Fidelity Investments ($588 million), Wellington Capital Management ($483 million) and Capital World Investors ($457 million). Overall, 344 institutions hold 96.6% of UAL shares, with Janus Capital Management, Fidelity Investments, Wellington Capital Management and Capital World Investors being the largest holders with 9.9%, 9.4%, 7.7% and 7.3% of the outstanding shares respectively.

Ctrip.com International ADR (CTRP): CTRP is a China-based consolidator of hotel accommodations, airline tickets and packaged tours targeting individual business and leisure travelers in China. CTRP aggregates information on hotels and flights and enables customers to make informed and cost-effective hotel and flight bookings. Mega funds added a net $242 million to their $1.93 billion prior quarter position, and taken together mega funds hold 43.3% of the outstanding shares, significantly more than their 30.1% weighting in the group. The top buyer was Capital World Investors ($442 million), and top holders were T Rowe Price ($667 million), Capital World Investors ($442 million) and Morgan Stanley ($350 million). Overall, 246 institutions hold 94.0% of CTRP shares, with T Rowe Price, Capital World Investors and Artio Global Management (318 million) being the largest holders with 11.5%, 7.6% and 6.3% of the outstanding shares respectively.

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General Methodology and Background Information: The latest available institutional 13-F filings of over 30+ mega hedge fund and mutual fund managers were analyzed to determine their capital allocation among different industry groupings, and to determine their favorite picks and pans in each group. These mega fund managers number less than one percent of all funds and yet they control almost half of the U.S. equity discretionary fund assets. The argument is that mega institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When mega Institutional Investors invest and maybe even converge on a specific investment idea, the idea deserves consideration for further investigation. The savvy investor may then leverage this information either as a starting point to conduct his own due diligence.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Source: Airline And Air Travel Service Picks From The World's Largest Money Managers