Haven't heard of FL Group? No, it's not from Florida. Actually, FL Group is a fund based in Iceland.
It's a fairly big fund apparent by this week's announcement it bought a 5.98% stake in AMR Corp. (NYSE:AMR), the parent company of American Airlines.
Despite a rally in AMR's stock in 2006, FL Group thinks there's much upside left. That is, with capacity shrinking, there should be a pick-up in pricing and profits.
In fact, other savvy investors, such as the Texas Pacific Group -- which recently was part of the buyout of Qantas -- think the same.
FL Group is far from a novice in the airline industry. The fund has made a variety of investments in European airlines. About a quarter of its assets are in airline issues.
As for AMR, FL Group thinks the airline is well-positioned for the uptrend because of its lucrative routes. Actually, the airline did something this year that is not very common with legacy carriers -- it posted a profit.
Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.
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