I take my absolute return approach to a deeper level by periodically buying and selling positions during the year. In late February, I suggested that investors cover the short position of Delta Airlines (NYSE: DAL) at $6.35 per share.
In my last update of the stocks on this list, I suggested that I would still be a seller of Delta. Shares of Delta did indeed lose value over the last three months. This move coincided with a blast in oil prices. Airlines are already struggling with a weak economy and excess capacity. Rising jet fuel prices make matters worse.
Until airlines can prove profitability on a consistent basis, I would continue to avoid shares. That said, I would not establish a new short position as oil prices appear to have peaked and are now falling.
Sit tight with your current short or stay out of the way during the third quarter and beyond.
Next: Stock to Avoid #2
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