Warren Buffett’s Berkshire Hathaway Inc. recently filed its Q3 13F filing with the SEC, disclosing its
For years, the famed investor stayed away from airlines stocks and recommended value investors do the same. So, it came as a big surprise when his firm’s 13F revealed new positions in three of the four major airlines in the United States: Delta Air Lines, Inc.
A Value Investment
Even more surprising was the timing of these picks, many analysts
Airlines stocks tumbled in the first half of 2016 before rebounding around the summer. In fact, over the first six months of the year, the Dow Jones U.S. Airlines Index INDEXDJUSAR lost almost 24 percent. But, after bottoming in late-June, the index started to recuperate, and is now up almost 2 percent year-to-date.
As it can be appreciated in the chart above, the stocks Buffett purchased traded at depressed valuations in the third quarter and in October, only starting to really surge again in November.
Moreover, since the filing and CNBC report were out on Monday:
- American Airlines has risen 3.5 percent.
- Delta Air Lines has escalated 2.2 percent.
- Southwest Airlines has spiked 4.3 percent.
- United Continental has gained more than 8.25 percent.
Even in spite of the recent run-ups, three of these airlines stocks still trade below their industry’s average of 9.2 times P/E. Only Southwest trades at a premium, at 13.1 times TTM earnings.
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