Top-level insiders tend to have a good understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the stock is attractive.
In this report, we are going to highlight a large purchase from a top-level insider at Boeing Co (BA:US). Boeing is a leading manufacturer of commercial jetliners. It also manufactures defense, space, and security systems. It is listed on the New York Stock Exchange and currently has a market capitalization of $124.5 billion.
Boeing Co: Insider Buying
Our data shows that on February 14, Boeing Chairman Lawrence Kellner bought 5,000 BA shares at a price of $208.91 per share. This trade cost the insider approximately $1.0 million and increased his holding to 7,500 shares.
Mr. Keller has considerable experience at both company and industry level. At Boeing, he has served on the board since 2011 and as Chairman since 2019. Meanwhile, he previously spent 14 years at Continental Airlines in key leadership positions including CEO, CFO, and COO. This background means he is likely to have a very good understanding of his company’s prospects.
What stands out about this trade from Mr. Kellner is that it has increased the size of his position by 200%. The fact that the insider has boosted his holding by such a large percentage indicates that he is very confident the stock is set to rise.
The 737 MAX grounding and Covid-19 have weighed heavily on Boeing's business over the last few years. In both 2019 and 2020, the company posted big losses. However, the group now appears to be heading in the right direction again.
For 2021, the company posted revenue of 62.3 billion, up 7% year on year. Meanwhile, core operating loss for the year was $4.1 billion, a big improvement on the loss of $14.2 billion posted for 2020. And in the fourth quarter, the company managed to generate positive free cash flow of $494 million, versus negative free cash flow of $4.3 billion in Q4 2020.
"2021 was a rebuilding year for us as we overcame hurdles and reached key milestones across our commercial, defense and services portfolios. We increased 737 MAX production and deliveries, and safely returned the 737 MAX to service in nearly all global markets. As the commercial market recovery gained traction, we also generated robust commercial orders, including record freighter sales. Demonstrating progress in our overall recovery, we also returned to generating positive cash flow in the fourth quarter," commented President and CEO David Calhoun.
Looking ahead, better conditions in commercial air travel could help Boeing. By the end of the year, global air travel could be at 84% of 2019 levels, according to analysts at Bain.
With that in mind, we see the insider buying here as a bullish development.