Update: On August 27, 2019, American’s stock hit a new five year low.
American’s management team sure is putting their money where their mouth is. No, not when it comes to actually making positive changes at the airline, but rather when it comes to investing in the airline’s stock.
American management buys more American stock
Yesterday American CEO Doug Parker purchased a further 50,000 shares of American Airlines stock, at a cost of $28.09 per share, or just over $1.4 million total.
He wasn’t the only one to invest in American yesterday, as six other top executives at American bought a combined 35,000 shares yesterday.
Historically Doug Parker’s compensation has largely been paid in stock rather than cash. At this point he owns a total of just over 2.2 million shares of American stock, currently valued at just over $60 million.
What should we make of this?
It seems like American’s top management thinks that the stock has more or less hit rock bottom, and things are going to get better from here. As I wrote about last week, American’s stock has just hit a three year low. Or maybe they’re just trying to get us to believe that’s the case.
On one hand I respect management that believes in their company. At the same time, in spite of Doug Parker having lost tens of millions of dollars as American’s stock price has plummeted over the past year, he can’t actually seem to bother to make changes at the airline that could have a positive impact.
So this makes me wonder why American’s management team thinks things are going to get better. American is going to have huge labor issues in the coming months, so to me it sure seems like things will get worse before they get better.
My guess is that this is just Parker being optimistic.After all, he’s not a great predictor of American’s stock price. In late 2017 when American’s stock was in the high $40s, Parker said the “stock is so undervalued it defies logic.”
It’s interesting to see seven of American’s top executives buying more stock. It makes me wonder if management is finally reaching a point where they’re coming to their senses, or what they know that we don’t.
While American’s stock may basically be at a three year low, it sure seems like it has the potential to get even lower if they can’t figure out the situation with their mechanics.
What do you make of Parker & Co. picking up more stock this week?