Insiders are Buying United Continental Holdings (UAL) Despite its Sky-High Valuation

Recent studies on insider trading have shown that investors can outperform the market by 7 percentage points by following certain insider purchases. Therefore, in this article, I will take a look at an air-travel company that has seen its insiders buy its stock this year.

United Continental Holdings Inc (NYSE:UAL), is a $14.25 billion market cap holding company that, through its wholly owned subsidiaries, United Air Lines, Inc. (United) and Continental Airlines, Inc. (Continental), transports people and cargo. It became the largest U.S. carrier after acquiring Continental in 2010.

United Continental Holdings Inc (NYSE:UAL)

On Monday April 28, Jeffery Smisek, Chairman, President and CEO, acquired 20,000 shares of Common Stock for prices ranging from $39.58 to $39.62 per share, inclusive. He now owns 487,838 shares of the company, worth more than $18.6 million. Earlier this year, on Feb. 12, Jane Garvey, Board Director, also purchased the company’s stock. Mrs. Garvey started a position with 1,150 shares, which se bought at prices ranging from $44.09 to $44.13 per share.

In addition to these insiders, more than 75 major hedge funds are long on this stock. The largest hedge fund shareholder is, by far, Thomas E. Claugus Gmt Capital, which held 9.77 million shares of the company at the end of last year. David Tepper’s Appaloosa Management Lp was the second-runner, with 6 million shares. Moreover, Doug Silverman and Alexander Klabin’s Senator Investment Group last reported having increased its stakes by 140%, to 3.6 million shares, and Sean Cullinan’s Point State Capital, – by 241%, to 3.5 million shares. Furthermore, as we have recently reported, Donald Chiboucis‘ Columbus Circle Investors declared, in its latest 13F filing, ownership of 1.71 million shares, valued at $76.4 million.

All of this bullishness cannot be understood by just looking at United Continental Holdings’ fundamentals, as the company boasts razor thin margins and below-average returns, holds alarming debt levels and trades at 41.5x P/E, more than 4 times its industry’s average valuation. In order to comprehend the ongoing activity, one must observe the firm’s growth prospects: analysts expect it to deliver average annual EPS growth rates around 35% over the next five years, and have provided a mean price target of $51.19 per share for the shorter term –this implies an upside potential of more than 30%. Main catalysts include checked-baggage fees, which could generate more than $1 billion in high-margin revenue, the willingness of its customers to pay a premium for certain luxuries that the airplanes provide, and the ability to “shield nearly $9 billion in income taxes due to its massive net operating loss carryforwards” (Morningstar).

With insiders, hedge funds and analysts betting on this company’s future, but with its stock trading at sky-high valuations, is it time to buy?

Disclosure: Javier Hasse holds no position in any stocks mentioned

Recommended Reading:

Insiders Are Buying Firstmerit Corp (FMER) & Horizon Bancorp (HBNC)

Insider Purchases at Four Jim Simons’ Small and Micro-Cap Picks

Two Banking Stocks That Insiders Are Buying

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!