Airline Shareholders Finally Rewarded For Their Patience

David Dierking

There may be no other industry that's been beaten down during the COVID-19 outbreak quite like the airline industry. Passenger traffic is down more than 90% and share prices have plummeted due to a lack of demand for travel and leisure.

Even Warren Buffett announced that he was abandoning airline stocks within the past month.

But this may prove to be one of those rare cases where Buffett was wrong.

While Buffett was getting out, retail investors were getting. Assets in the U.S. Global Jets ETF (JETS) has grown from around $50 million earlier in the year to more than $1 billion today.

Like we've seen with oil stocks, many small investors have piled into beaten down sectors hoping to catch the dip. Buyers of funds, such as the United States Oil Fund (OIL) and the ProShares Ultra Bloomberg Crude Oil Fund (UCO), are finally seen some payoff to their investments.

But those who've had faith in an airline stock rebound are finally seeing that faith rewarded.

JETS_chart-2

Buyers started moving into airline stocks during the depths of the bear market and continued to build positions as the share price of JETS was bottoming out.

For about two months, airline stocks remained flat, but the past month has been an entirely different story. Since the mid-May low, JETS has returned 80% after many investors moved in.

I still think that airlines have a fair amount of upside ahead. With Friday's jobs report coming in much better than expected, optimism about an economic rebound remains high and could continue pushing airline stocks even higher.

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