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Strategies & Market Trends : Value Investing

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To: gcrispin who wrote (55628)	12/10/2015 10:47:47 AM
From: gcrispin	Read Replies (1) of 78750

On the flip side of the KMI debacle are the airlines which will greatly benefit from the drop in jet fuel. I added a small amount to my position in LUV which I bought in July. I also own DAL and AAL. AAL is unhedged so they will benefit the most. In its 2014 annual report American noted that it would save $43 million for every $0.01 decrease per gallon in the price of jet fuel. Since the beginning of 2015, jet fuel prices have slipped $0.258 per gallon leading to fuel savings of roughly $1.1 billion on an annualized basis. The savings are even larger if the comparison is with the $3 per gallon level seen in 2014. In this case the savings would be $1.77 per gallon resulting in annualized savings of $7.6 billion. The airline sector was so bad for so long that there is a market prejudice to trusting the companies with a higher valuation that has been awarded to most transportation companies. http://www.reuters.com/article/us-airlines-iata-outlook-idUSKBN0TT0ZF20151210#qDySo4epFYmWL3mC.97 This is an interesting talk regarding market prejudices and value stocks. It was a presentation at Google by Sanjay Bakshi. dl.dropboxusercontent.com

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