Guru David Tepper (Trades, Portfolio), founder and president of Appaloosa Management LP, added 1,271,440 shares to his stake in Delta Air Lines Inc. (DAL, Financial) during the first quarter.
Delta Air Lines is also traded in Germany, Mexico, Switzerland and the U.K.
Delta Air Lines is an international airline company that provides air transportation for its passengers as well as cargo transportation throughout the U.S. and across the world. The company operates its business in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los Angeles, Minneapolis-St. Paul, New York-LaGuardia, New York-JFK, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita.
Delta Air Lines has a market cap of $32.72 billion, a P/E ratio of 7.12, an enterprise value of $38.17 billion and a P/B ratio of 2.91.
Delta Air Lines has three good signs according to GuruFocus. The Piotroski F-score, which was invented by professor Joseph Piotroski, is 7 of 7, indicating a healthy situation for the company. Delta Air Lines' operating margin is expanding. Margin expansion is usually a good sign. The dividend yield is close to a three-year high at 1.27% per share.
During the first quarter Tepper added 1,271,440 shares of Delta Air Lines at an average price of $46.68. The purchase increased Tepper’s stake by 17.36%. He now owns 8,594,855 shares of Delta Air Lines.
Tepper may have added to his stake for the following reasons:
- Delta Air Lines is a world-renowned airline service that has reported a 30.10% increase in cash flow over the previous five years according to GuruFocus. This is a great sign for a long-term value investor according to both Seth Klarman (Trades, Portfolio) and Bruce Berkowitz (Trades, Portfolio).
- The company is trading below its intrinsic value based on discounted earnings model. The company is worth $63.57 according to GuruFocus which provides a 33.30% margin of safety for Tepper.
- Delta Air Lines has a Beneish M-Score of -2.75 indicating that the company is not a manipulator of its financial results.
Below is a Peter Lynch chart that shows Delta Air Lines is undervalued.
Conclusion
Tepper has returned a remarkable, 26.7% for his Appaloosa hedge fund since its inception in 1993. Delta Air Lines has strong financials, and it's trading below its intrinsic value. It has a strong Piotroski F-Score. And, it also has a Beneish M-Score of -2.75. This indicates that the company is not a manipulator of its financial results.
Cheers to your investment success.
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