Chicago Tribune – Hedge funds are investing heavily in United Airlines and other old-line carriers, drawn by the prospect of wide-scale mergers and better times ahead for U.S. carriers.
After a spending spree this year, hedge funds control nearly 50 percent of the shares outstanding at US Airways Group, about 30 percent at both United and American Airlines and 16 percent at Continental Airlines, Securities and Exchange Commission filings show.
The total value of their airline bet: $6.7 billion, as of last Thursday.
In fact, the largest shareholders at each of the four largest U.S. airlines are hedge funds, displacing mutual funds like Fidelity that have traditionally backed this industry. (The other two network carriers, Delta Air Lines and Northwest Airlines, are in bankruptcy and have indicated they plan to cancel their stock once they exit Chapter 11, rendering it worthless.)
Year-to-date, the four largest airlines have seen their stocks surge: Continental is up 109 percent, US Airways is up 52 percent, American Airlines is up 43 percent and United is up 24 percent.
