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Why Qantas Airways Limited (ASX:QAN) sold its shares in Helloworld Travel Ltd (ASX:HLO) 

Integrated travel service provider Helloworld Travel Ltd (ASX: HLO) has announced that its CEO Andrew Burnes and Executive Director Cinzia Burnes have each sold 2,500,000 of their shares in the company for $5.50 a share whilst Qantas Airways Limited (ASX: QAN) also sold 2,000,000 shares at the same price.

According to the announcement, “the sale represents approximately 11.4% of the total shareholding of the Burnes interests and after the sales, Andrew Burnes retains 10,401,881 shares, Cinzia Burnes retains 10,138,014 shares, the Burnes Group Trust retains 18,480,105 shares and Longbush Nominees retains 10,000 shares, a total of 39,030,000 shares (31.3%). The sale represents approximately 9.4% of Qantas’s total shareholding and after the sale, Qantas retain 19,223,454 shares (15.4%)”.

Liquidity and the ASX 300

The announcement also clarified that the reason for the sale was to broaden the company’s shareholding given that it was concentrated in the hand of the Burnes family and Qantas. This is expected to increase liquidity in the company’s shares and make it easier for investors to buy and sell their shares.

Prior to the sale, over 70% of the shares in Helloworld were held by Qantas and the Burnes family. The sale reduces this percentage shareholding to 64.5%.

The company also said that it had, “received many enquiries from domestic and international investors seeking liquidity opportunities. Andrew Burnes, CEO of Helloworld Travel said the sale represented an opportunity to broaden the shareholder base in HLO and the improved liquidity would help the Company gain inclusion on the ASX300 list in future. The sales were effected as block trades to several new and current institutional shareholders”.

Foolish Takeaway

Share’s in Helloworld exploded in mid-August from a share price of $4.47 on August to 15th to last Friday’s closing price of $6.03 (an increase of almost 35%). Even though Qantas and the Burnes family sold for a lower price of $5.50, that’s still a 23% premium and so should investors be worried about insiders selling down their stake?

I think ordinarily it would be a cause for concern but given that Qantas and the Burnes family still retain a 64.5% shareholding, that is still significant enough for them to retain some skin in the game. I would imagine that if the company were to fulfill its potential, this shareholding could come down even further. It’s certainly something to keep an eye on.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can find Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of Helloworld Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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