Southwest Airlines Insiders Added US$109.3m Of Stock To Their Holdings

Multiple insiders secured a larger position in Southwest Airlines Co. (NYSE:LUV) shares over the last 12 months. This is reassuring as this suggests that insiders have increased optimism about the company's prospects.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Southwest Airlines

The Last 12 Months Of Insider Transactions At Southwest Airlines

Over the last year, we can see that the biggest insider purchase was by Independent Chair of the Board Rakesh Gangwal for US$107m worth of shares, at about US$30.00 per share. That implies that an insider found the current price of US$32.10 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Southwest Airlines share holders is that insiders were buying at near the current price.

Over the last year, we can see that insiders have bought 3.70m shares worth US$109m. But insiders sold 4.01k shares worth US$136k. Overall, Southwest Airlines insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Southwest Airlines is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Southwest Airlines Have Sold Stock Recently

The last three months saw significant insider selling at Southwest Airlines. In total, Chief Administrative Officer Linda Rutherford sold US$132k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of Southwest Airlines

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Southwest Airlines insiders own 1.0% of the company, currently worth about US$190m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Southwest Airlines Insider Transactions Indicate?

An insider hasn't bought Southwest Airlines stock in the last three months, but there was some selling. But we take heart from prior transactions. And insider ownership remains quite considerable. So we're not too bothered by recent selling. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 1 warning sign for Southwest Airlines you should know about.

Of course Southwest Airlines 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.