Possible Bearish Signals With Delta Air Lines Insiders Disposing Stock

Many Delta Air Lines, Inc. (NYSE:DAL) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Delta Air Lines

Delta Air Lines Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the President, Glen Hauenstein, sold US$4.9m worth of shares at a price of US$49.05 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$39.50. So it is hard to draw any strong conclusion from it.

Happily, we note that in the last year insiders paid US$1.6m for 40.00k shares. On the other hand they divested 218.21k shares, for US$10m. In total, Delta Air Lines insiders sold more than they bought over the last year. The average sell price was around US$47.99. It is certainly not great to see that insiders have sold shares in the company. However, we do note that the average sale price was significantly higher than the current share price (which is US$39.50). The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insiders At Delta Air Lines Have Bought Stock Recently

Over the last quarter, Delta Air Lines insiders have spent a meaningful amount on shares. Independent Director Wilfred Chiang spent US$439k on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.

Does Delta Air Lines 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. It appears that Delta Air Lines insiders own 0.4% of the company, worth about US$95m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Delta Air Lines Insider Transactions Indicate?

The recent insider purchase is heartening. On the other hand the transaction history, over the last year, isn't so positive. We don't take much heart from transactions by Delta Air Lines insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. In short they are likely aligned with shareholders. 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. For example - Delta Air Lines has 2 warning signs we think you should be aware of.

Of course Delta Air Lines may not be the best stock to buy. So you may wish to see this free collection of high quality 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 of direct interests only, but not derivative transactions or indirect interests.

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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.