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January 30, 2006
Hedge Funds Acquire Stake in Alitalia
In spite of the strikes and rumors of bankruptcy regarding Alitalia, two investors have reportedly purchased big stakes in the carrier. This seems to be the trend as some hedge fund sources say it is part of the strategy to buy airlines seen as cheap in a bull market. Walter Capital Management and Newton Investment Management acquired a 12.4 percent stake in the Italy's biggest airline. Newton is reportedly a long-term investor and bought the stock in a recent issue as it is positive on the company's outlook. Reuters reports:
"Hedge funds bought when Alitalia staff went on strike and they bought BA in the summer when there were strikes (at airline caterer Gate Gourmet)," a hedge fund manager said. "Strikes are about working conditions and money and airline unions in most recent cases have lost ... That's generally good for the health of a airline." The airline's 1 billion euro (690 million pound) rights issue late last year, coordinated by Deutsche Bank, did worry investors, given that it was more than the carrier's 800 million euros market capitalisation at that time, but not enough to sell the shares.
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