Boeing Delay Buoys Skeptics

When Boeing made the announcement, Francois Parenteau, manager of the New York-based Defiance Fund, wasted no time. Defiance, a small hedge fund with assets of $25 million and a 23% year-to-date return, shorted 5,000 shares of Boeing. The fund is now short 10,000 shares at an average price of $88.

"With the 787, Boeing embarked on its most complex project ever," Parenteau said, in an interview. "It is the first composite plane, and it is being built internationally with suppliers all over the world, and all of this has to come together."

In Parenteau's eyes, Boeing has sought to maintain that deliveries are on track in order to keep customers from moving to competitor Airbus. Airbus may have had problems, but it is rebounding. The first A380 jet will be delivered Monday to Singapore Airlines, about 22 months late. The A350 XWB, a rival to the 787, is scheduled for deliveries in 2013.

To be sure, Parenteau has been skeptical for a while. In a report to shareholders in July 2006, he wrote "Investors who keep on dreaming that Boeing will deliver this plane on time and with no hiccups haven't learned anything (from the A380 delay). Industrial projects of this complexity are rarely completed on time."

At that time, he sold 5,000 shares short at $81. "Very often we are a bit early," he confesses. "I have to get better at waiting, but I am more confident than ever."