Skift Take

Follow the money — at your own risk, of course. These two hedge funds are putting their money in airline and online travel agency stocks, often investing in competitors. Rising tides lift all boats, after all.

Where is the supposed smart money investing in travel these days? What’s hot and what’s not?

Two of the most prominent hedge funds with a big travel focus, Paul Reeder’s Par Capital Management and Brad Gerstner’s Altimeter Capital Management, are investing heavily in airlines and online travel agencies, and both started or increased their investments in Avis Budget Group in the second quarter. Avis Budget Group had a tough second quarter, however.

Par Capital Management in the second quarter increased its stakes in Avis Budget Group, Delta, El Dorado Resorts, Red Rock Resorts and Trivago while it disposed of its stocks in Xenia Hotels and Isle of Capri Casinos. The hedge fund, which had $8.7 billion in total market value at the end of June, also downsized its holdings in Alaska Airlines, MGM Resorts International, Penn National Gaming, and TripAdvisor.

Stephen Kaufer, CEO of TripAdvisor, is speaking at Skift Global Forum 2017. Get Tickets Now

Meanwhile, the smaller Altimeter Capital Management increased its stakes in Alaska Airlines, United and Yelp while disposing of its shares in Allegiant Travel, which owns Allegiant Air. Altimeter made new investments in Avis Budget Group and TripAdvisor. Altimeter had a total market value of $2.4 billion at the end of June.

Hedge funds such as these two are required to disclose their holdings in quarterly Securities and Exchange Commission filings; the most recent Altimeter Capital disclosure is linked here, and Par Capital is here. Skift broke out their travel holdings and any changed positions in the charts below. You can quibble with companies we categorized as “travel,” including Yelp and Global Eagle Entertainment, for example, but Yelp is obviously big in restaurants and has some travel-booking partnerships, and Global Eagle Entertainment provides content and Wi-Fi connectivity to the airline industry.

We toyed with including Alphabet Inc. (Google) in our charts since it has such huge travel business, but in the end we didn’t because travel makes up perhaps — very roughly — just 13 to 16 percent of its total revenue. Altimeter Capital Management had 6,400 shares of Alphabet worth $5.96 million in the second quarter, and Par Capital Management had no stake.

Alibaba might also have been included — we could make an argument either way — although the China-based e-commerce company doesn’t break out revenue for Fliggy, its marketplace that includes both online travel booking and second-hand auctions. Alibaba’s core commerce segment accounted for 85 percent of revenue in fiscal 2017, but the platform offers a lot more than travel. Altimeter has 25,750 shares in Alibaba that were valued at $3.62 million on June 30; Par is not an investor.

Among the takeaways, it is interesting to see that some airline stocks are hot after years of losses. The two hedge funds incidentally led a proxy fight at United Airlines in 2016.

Another trend, which won’t comes as a surprise to seasoned investors, is that these hedge funds buy stocks in competing players whether they are investing in airlines or online travel agencies.

But won’t any United gains hurt Delta and any Priceline Group inroads pinch Expedia, for example? Not necessarily.

Par Capital Management has investments in Alaska, American, Delta, JetBlue, Southwest, and United, as well as Ctrip, Expedia, Priceline, TripAdvisor, and Trivago, for instance.

That sector-wide focus has its limits, of course. While Par Capital Management maintained its holdings in Ctrip, Expedia, and Priceline, it sold some of its shares in TripAdvisor, which has seen its stock price tanking as it transitions to mobile and metasearch.

Par Capital Management’s investment focus was even more uneven in gaming-related stocks. While the hedge fund held onto its 9.25 million shares in Boyd Gaming in the second quarter, Par Capital downsized its stakes in MGM Resorts, Penn National Gaming, and Pinnacle Entertainment.

Meanwhile, Altimeter Capital Management has investments in Alaska Air Group, American Airlines Group, Delta, and United. Unlike Par Capital, Altimeter has no investments in low-cost carriers JetBlue or Southwest, and disposed of its stake in Allegiant Travel in the second quarter.

In its own endorsement of the trajectory of online travel, Altimeter had investments in Ctrip, Expedia, the Priceline Group, Yelp, and a new one, TripAdvisor.

In the second quarter, Par Capital Management’s top three travel investments were in United ($1.22 billion), Expedia ($1.16 billon), and Delta ($702.16 million).

Altimeter Capital Managements top 3 investments as of the end of June were United ($775.7 million), Expedia ($700 million), and the Priceline Group ($230.07 million).

While Par Capital Management had some hotel/gaming investments (Boyd Gaming, Caesars Acquisition Co., Eldorado Resorts, MGM Resorts, Penn National Gaming, Pinnacle Entertainment, and Red Rock Resorts) in the second quarter, Altimeter Capital Management had none.

Neither had any cruise investments.

Of course, there are many other hedge funds and institutions that invest in travel. Warren Buffett’s Berkshire Hathaway has famously returned to airline investments. And hedge fund Tiger Global secured a new investment in the Priceline Group in the second quarter. Tiger Global purchased 1.04 million shares ($1.95 billion) in the second quarter.

Here’s at look at the travel holdings of two prominent travel-oriented hedge funds. Both invest in other sectors, too.

Par Capital Management Postions Q2 2017
Total Positions in Travel 22
New Positions 1
Increased Positions 5
Same Positions 11
Decreased Positions 5
Disposed Positions 2


Par Capital Management Travel Investments Q2 2017
Investments Value x $1,000 Percent Change Shares Percent Change
Alaska Air Group $22,400 -99.99% 2,500,000 -44.47%
American Airlines Group $83,851 18.95% 1,666,351 0.00%
Avis Budget Group $178,362 30.45% 6,540,608 41.51%
Boyd Gaming $229,659 12.72% 9,256,701 0%
Caesars Acquisition Co.* $10,682 N/A 560,719 N/A
Canadian Pacific Railway $39,632 9.45% 246,450 0.00%
Ctrip $2,154 9.56% 40,000 0.00%
Delta Air Lines $702,157 38.06% 13,065,809 18.07%
Eldorado Resorts $149,496 96.74% 7,474,779 86.17%
Expedia $1,164,042 18.08% 7,814,983 0%
Global Eagle Entertainment $103,173 11.59% 28,981,072 0%
Hertz $67,719 -34.43% 5,888,576 0%
JetBlue $72,903 10.77% 3,193,290 0%
MGM Resorts International $123,433 -35.11% 3,994,800 -42.47%
Penn National Gaming $38,694 -29.04% 1,808,113 -38.89%
Pinnacle Entertainment $1,005 -83.57% 50,854 -83.77%
The Priceline Group $258,141 5.08% 138,005 0.00%
Red Rock Resorts $55,626 33.42% 2,362,032 25.66%
Southwest Airlines $349,115 15.58% 5,618,200 0%
TripAdvisor $102,971 -49.85% 2,695,569 -43.34%
Trivago $147,496 101.37% 6,234,000 10.89%
United Continental Holdings $1,226,177 6.52% 16,294,711 0%

* Class A shares

Altimeter Capital Management Positions Q2 2017
Total Positions in Travel 10
New Positions 2
Increased Positions 3
Same Positions 5
Decreased Positions 0
Disposed Positions 1


Altimeter Capital Management Travel Investments Q2 2017
Investments Value x $1,000 Percent Change Shares Percent Change
Alaska Air Group $85,495 -0.89% 952,489 1.82%
American Airlines Group $42,772 18.80% 850,000 0%
Avis Budget Group $818 N/A 30,000 N/A
Ctrip $69,318 9.58% 1,287,009 0%
Delta Air Lines $46,402 16.92% 863,455 0%
Expedia Inc. $669,994 18.05% 4,498,111 0%
The Priceline Group $230,074 5.08% 123,000 0%
TripAdvisor $5,570 N/A 145,800 N/A
United Continental Holdings $775,659 10,307,765 7.04%
Yelp* $6,946 104.89% 231,370 123.54%

* Class A shares

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Tags: airlines, avis budget, investments, otas

Photo credit: An interior of a United plane. Both Par Capital Management and Altimeter Capital Management are major investors in United Airlines. United Airlines / United Airlines

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