Airlines have a challenging reputation among investors on account of the highly competitive and capital intensive nature of these companies. There is little left for investors when all is said and done. To add to margin pressures they are also prone to going bust after every large economic upheaval whether it is the bursting of a real estate bubble or a pandemic. The only time I invested in an Airline was to buy shares of Alaska Airlines a few years before the pandemic and because service fees for things like excess baggage had changed industry dynamics.
I was surprised to see that an insider of United Airlines (UAL) not only purchased shares last week but this was his third purchase in the last two months totaling almost $6 million. The insider also happens to be an independent director with an investment background, one of our favorite kind of insiders. Edward Shapiro is the former Managing Director of Boston-based travel, media and technology focused investment firm PAR Capital Management. He has also been on United’s board for the last 6 years. While United is not my first choice when I think about an airline, this purchase might make me revisit my Alaska Airlines investment to see if the strong summer travel season and easing oil prices have made a difference.
Welcome to edition 630 of Insider Weekends. Insider buying more than doubled last week with insiders purchasing $34.47 million of stock compared to $13.33 million in the week prior. The level of inside buying is still muted because we are in earnings season. Selling declined significantly to $398.8 million compared to $1.1 billion in the week prior.
Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week dropped to 11.57. In other words, insiders sold almost 12 times as much stock as they purchased. The Sell/Buy ratio this week was favorable compared to the prior week when the ratio stood at 82.79.
Notable Insider Buys:
1. United Airlines Holdings, Inc. (UAL): $36.75
Director Edward Shapiro acquired 50,000 shares of this airline, paying $35.74 per share for a total amount of $1.79 million. Mr. Shapiro increased his stake by 50.00% to 150,000 shares with this purchase.