Boeing Is One of Third Point’s Monthly Winners, Stock Soars

Third Point released its monthly update on June 3. The hedge fund told Barron’s that it took a stake in Boeing (NYSE:BA) credit.

Third Point bought Boeing debt

Notably, Loeb’s Third Point Offshore fund also listed Boeing as one of its monthly winners. The hedge fund’s other monthly winners in May were Walt Disney (NYSE:DIS), Burlington Stores (NYSE:BURL), Charter Communications (NASDAQ:CHTR), and TE Connectivity (NYSE:TEL).

Boeing stock and COVID-19

So far, 2020 has been rough for Boeing and other travel and tourism-related stocks. Due to COVID-19 and lockdowns, air travel has come to a standstill. Many market participants, including Boeing CEO David Calhoun, think that it could take two or three years for travel to return to the 2019 levels. COVID-19 forced airlines to ground aircraft and cut costs. Boeing stock has lost 53% of its value year-to-date. However, the stock has recovered 61% since it hit lows in March.

Restarting production of 737 MAX planes

On May 27, Boeing announced that it will restart the production of its beleaguered 737 MAX planes. After two crashes involving 737 planes in 2019, airlines had the ground the aircraft. Boeing halted its production due to a huge backlog.

Boeing wants to keep its order book

The company wants to keep its order book intact. Recently, the company scored two wins. SMBC Aviation, an aircraft leasing firm, announced on June 2 that it will defer but not cancel the delivery of 68 737 MAX jets until 2025–2027. Similarly, Germany’s TUI Group, Europe’s biggest travel and holiday company, reached an agreement with Boeing. Notably, Boeing will provide compensation for delayed MAX deliveries but TUI will keep most of its order book intact.

Stock’s rally

The news around Boeing’s order book and Third Point’s stake led the stock to rally about 13% on Wednesday. Usually, a stake by an activist investor is taken as a positive sign by the market. Activist investors help a company turn around for better.

Is Third Point confident in Boeing?

Third Point hasn’t taken a stake in equity but has bought Boeing’s debt. Still, investors got a vote of confidence from the billionaire investor. The situation could turn around for the company. However, the road ahead still looks long. Therefore, investing in stocks that rely on restarting air travel might be a challenge. Investors with a high-risk appetite might be able to stomach the turbulence.