Douglas C. Lane & Associates Inc. (DCLA®) is a registered investment advisory firm based in New York City. It manages approximately $4 billion of capital of high net worth families, trusts, pensions, endowments, foundations and institutions.
It disclosed an equity portfolio valued at some $3.5 billion as of the end of the third quarter. The equity portfolio is mainly invested in Industrials (22%), Technology (17%) and Consumer Discretionary (17%) stocks. Douglas C. Lane’s last 13F filing showed that the fund raised its exposure towards financials but reduced his holdings in the health care sector.
In this article, we will look into the top three picks held at the end of the third trimester. These companies are Delta Air Lines Inc. (DAL, Financial), United Continental Holdings Inc. (UAL, Financial) and General Electric (GE, Financial).
Among the 10 largest holdings from Douglas C. Lane’s equity portfolio (which amasses 20.25% of the total portfolio value), we found the top three in the next list:
Delta Air Lines represents the most valuable investment in Douglas C. Lane´s portfolio, which holds 2.41 million shares, down by 4% on the quarter; the value of the stake amounts to a market value of $108.2 million. We must highlight that the stock lost about 0.6% during the year. The poor performance of the beginning of 2015 was truncated by a good stock movement of 9.5% in the third quarter. Further, since October the stock is improving its performance due to a good number of passenger traffic figures for the past month, which showed an annual drop in its passenger unit revenue but better than expected by the Delta Airlines. Those expectations were around 5% during the quarter. The air transportation company has gained better projections from analysts in the past days. JPMorgan Chase & Co. (JPM, Financial) boosted its price target to $74.5 from $63.
The company reported better-than-expected earnings for the third quarter on Wednesday. A net income of $1.32 billion, or $1.65 per share, compared to $357 million or $0.42 per share in the same quarter of the previous year. Excluding items, EPS came in at $1.74 per share. On an improving global economy, that should benefit Delta from a higher passenger demand.
Delta Air Lines is one of the favorite airline stocks among hedge funds. The largest shareholder of the company was Lansdowne Partners, with 26.6 million shares at the end of June.
In second place, we found United Continental Holdings. The fund held about 1.61 million shares with a market value of $85.3 million. With a market cap of $21.39 million, United Continental is down by more than 13% during 2015. The company provides air transportation services in North America, the Asia-Pacific, Europe, the Middle East, Africa and Latin America. In an industry with low barriers to entry, new entrants have lower costs than United, and this is a major risk for the firm. Leon Cooperman (Trades, Portfolio) held a stake of 2.81 million shares of the company valued at $148.96 million at the end of the second quarter. In that quarter, Sarah Ketterer (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), and Joel Greenblatt (Trades, Portfolio) initiated new positions in the stock with 1,889,402, 45,000 and 190,901 shares.
Next in line is General Electric. The fund held about 2.96 million shares valued at $74.7 million at the end of the third quarter of 2015. The past days we have seen that Nelson Peltz's Trian Partners announced a $2.5 billion stake in the $290.47 billion market cap company. Shares of General Electric were up on the back of the news, and the stock continues with the upward trend probably due to investor´s thought about the “new“ activist shareholder to start making changes.
The firm also reported better-than-expected numbers; it reported a Q3 profit of $2.51 billion or $0.25 per share that beat expectations but were lower than the $3.54 billion or $0.35 per share obtained in the same quarter of the past year. Further, revenue declined 1% to $31.68 billion. Analysts were expecting earnings of $0.26 per share on revenue of $28.57 billion.
Steven Romick (Trades, Portfolio) was bullish on the stock with a long position of 10,630,330 shares, up by 29.40% from the previous quarter.
Disclosure: Omar Venerio holds no position in any stocks mentioned
