Are Big Money Investors Wrong About US Airways?

One of the great maxims of traders and Wall Street pros is to follow the "smart money."

I'm not much for the thesis that institutional shoppers tend to make smarter investing decisions, but many of you who've read my ruminations on insider buying say you'd also like to know how the Big Money is betting. Your wish is my command.

Next up: US Airways (NYSE: LCC  ) . Are institutions bullish or bearish when it comes to this suddenly profitable legacy airline?

Foolish facts

Metric

US Airways

CAPS stars (out of 5) *
Total ratings 785
Percent bulls 56.1%
Percent bears 43.9%
Bullish pitches 67 out of 131
Highest rated peers Deutsche Lufthansa, Southwest Airlines, GOL Linhas

Data current as of Jan. 27.

Fools couldn't be more disapproving of most airline stocks, but they reserve a particularly virulent dislike for US Airways. Are you really surprised? This, after all, is the company that made the bathroom sink the only source of free water on domestic flights two years ago.

CEO Doug Parker took ridicule for the move, but economics said it had to be done. A number of carriers now charge for what were once basic amenities. In the case of US Airways, a long history of low or negative returns on capital dictated dramatic action.

This week, Parker got a chance to celebrate the results of acting boldly. US Airways reported its first profitable fourth quarter since 2006. Revenue rose 10.7% to $2.9 billion, resulting in $0.17 in per-share earnings. Analysts were expecting just $0.06 per share.

Institutional ownership history

Top Owners

2007*

2008*

2009*

Latest*

Fidelity Investments

10,593,935

16,202,748

16,773,958

20,969,087

Wellington Management

5,103,882

13,771,655

19,814,118

9,926,419

BlackRock

112,059

1,144,489

10,362,752

8,423,798

The Vanguard Group

2,539,605

3,621,157

6,310,124

6,944,691

Columbia Management Investment

2,492,855

5,874,964

5,550,437

5,220,018

TOP 25 TOTAL

30,214,021

52,593,535

90,188,153

95,247,636

Source: Capital IQ, a division of Standard & Poor's. *Indicates the number of shares owned.

Does the beat mean US Airways is a buy? Big Money investors have backed off their buying in recent months, but on a net basis they've added to their position in the carrier since the end of 2009.

Meanwhile, some Fools sense value in the shares at current levels. Four of the seven investors to rate the stock in CAPS over the past week say it will outperform the market, including All-Star performer wcwhiner.

Competitor and peer checkup

Company

Institutional Ownership

Insider Ownership

AMR Corp. (NYSE: AMR  ) 71.01% 1.53%
Delta Air Lines (NYSE: DAL  ) 88.69% 0.80%
United Continental Holdings (Nasdaq: UAL  ) 60.01% 0.28%
US Airways 87.42% 0.50%

Source: Capital IQ. Data current as of Jan. 27.

But judging from this table, the skeptics may be right. United Continental has by far the best ownership profile. Only 60% of institutions own the stock, which means there's plenty of room remaining for Big Money buyers.

By contrast, US Airways has already sold 87% of itself to institutional investors. Their next most likely move is to sell. Despite my problems with the carrier's Q4 report, I'd much rather have money in UAL right now.

Do you agree? Disagree? Let me know you would rate US Airways using the comments box below. You can also recommend other stocks for me to evaluate by sending me an email, or replying to me on Twitter.

Interested in more info on the stocks mentioned in this story? Add AMR Corp., Delta Air Lines, United Continental Holdings,or US Airwaysto your watchlist.

Southwest Airlines is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is smarter than the average bear.


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