Searching the airline junk yard

Fri Oct 1, 2004



The hedge fund industry has no sense of history. And this can be a good or bad thing depending on how you look at it. Mistakes will be repeated by newcomers failing to realize how other fund managers ran into trouble, but at the same time fund groups won't be deterred from placing similar bets that may actually pay off.

Take the airline sector as a sample case. Big investment bets on battered airlines stocks apparently poised for a turnaround have had a dubious history for the hedge fund industry. Just ask Tiger Management's Julian Robertson, an industry legend who was stuck with a ton of US Airways stock in 1999 that just wouldn't take off. And a combination of recession and terror concerns again grounded airline stocks in 2001, hurting numerous value-focused funds.

But that was then, and in 2004 sentiments have changed quite a bit. Sure, a...

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