Block Trades in Turkish Airlines Help Keep Share Price Sky-High

  • Block traders paid 7% premium to market in February: BIST data
  • Stocks extends 240% rise over the past 12 months to new high

Somebody loves Turkish Airlines’ stock.

Even as Turkey’s flagship carrier rallied to a fresh record this week, more than tripling from prices a year ago, a handful of investors seem willing to pay the biggest premium over average market prices in at least seven months.

So-called block trades, where buyers and sellers exchange large chunks of stock away from the prying eyes of a public exchange, were executed at an average of 7 percent above the listed price in February, according to Borsa Istanbul data. That compares with a 1 percent premium for block trades over the previous six months.

Sky High

Some investors have paid 7% premium for Turkish Airlines shares in February

This month, Bank of America Merrill Lynch and Renaissance Capital each said the shares could rally past 20 liras per share, up from 5.54 liras a year ago, on stronger traffic growth, a weak lira, and renewed optimism about a recovery in Turkey’s battered tourist industry.

These block trades “often happen when the investor expects significant stock gains within a short period,” said Burak Cetinceker, an Istanbul-based money manager at Strateji Portfoy, who declined to reveal his position in the stock.

Turkish Airlines’ Climb Turns Some Money Managers Into Cynics

But the purchases are also beginning to raise eyebrows.

“I’m always suspicious of block trades away from market prices where parties are not revealed,” said Julian Rimmer, a London-based emerging-markets trader at Investec, who says Turkish Airlines’ valuation is no longer compelling. “Minority shareholders should at least know who is transacting.”

The weighted average price that buyers paid for Turkish Airlines stock in February through block trades was 18.39 liras per share, compared with an averaged listed price of 17.19 liras per share over the period, according to data compiled by Bloomberg. The airline rallied more than 14 percent this month to a fresh record of 18.85 liras on Tuesday.

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