We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Qantas Airways Limited (ASX:QAN).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Qantas Airways Insider Transactions Over The Last Year
The CEO, MD & Executive Director, Alan Joyce, made the biggest insider sale in the last 12 months. That single transaction was for AU$9.0m worth of shares at a price of AU$6.29 each. That means that an insider was selling shares at around the current price of AU$5.70. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it’s not too bad (but it’s still not a positive). Alan Joyce was the only individual insider to sell shares in the last twelve months. Notably Alan Joyce was also the biggest buyer, having purchased AU$1.7m worth of shares.
In the last twelve months insiders purchased 270k shares for AU$1.7m. But insiders sold 1.4m shares worth AU$9.0m. You can see a visual depiction of insider transactions (by 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Qantas Airways Have Bought Stock Recently
It’s good to see that Qantas Airways insiders have made notable investments in the company’s shares. We can see that Chairman Richard James Goyder paid AU$172k for shares in the company. No-one sold. That shows some optimism about the company’s future.
Does Qantas Airways Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.3% of Qantas Airways shares, worth about AU$30m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Qantas Airways Tell Us?
It’s certainly positive to see the recent insider purchase. However, the longer term transactions are not so encouraging. The more recent transactions are a positive, but Qantas Airways insiders haven’t shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. So they seem pretty well aligned, overall. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.