As United Airlines Holdings, Inc. (NASDAQ:UAL) drops to US$11b market cap, insiders might rethink their US$5.9m stock purchase earlier this year
The recent price decline of 12% in United Airlines Holdings, Inc.'s (NASDAQ:UAL) stock may have disappointed insiders who bought US$5.9m worth of shares at an average price of US$39.38 in the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$5.0m which is not ideal.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for United Airlines Holdings
United Airlines Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Director Edward Shapiro bought US$2.2m worth of shares at a price of US$45.20 per share. That means that even when the share price was higher than US$33.07 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Edward Shapiro was the only individual insider to buy during the last year.
Edward Shapiro purchased 150.00k shares over the year. The average price per share was US$39.38. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
United Airlines Holdings Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at United Airlines Holdings. We can see that Independent Director Edward Shapiro paid US$1.8m for shares in the company. On the other hand, insider Gregory Hart netted US$544k by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Insider Ownership
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that United Airlines Holdings insiders own 0.4% of the company, worth about US$46m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The United Airlines Holdings Insider Transactions Indicate?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest United Airlines Holdings insiders are well aligned, and that they may think the share price is too low. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 1 warning sign with United Airlines Holdings and understanding this should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
