By Mackenzie Tatananni

Shares of Southwest Airlines have handily outperformed the broader market in 2026, more than a year after Elliott Investment Management took an interest in the company. Now the activist investor is trimming down its stake.

A securities filing Monday shows Elliott sold around 4.5 million Southwest shares between December and late January. The sales brought its holdings to 46.6 million shares, representing a 9% stake in the airline, down from 9.9% in December.

Elliott noted in the filing that its "combined economic exposure," which accounts for options and swaps, brings its current stake to 10.7%. The firm's holdings had an aggregate value of about $1.3 billion at the time of filing.

Elliott first disclosed a stake in Southwest Airlines in 2024, the same year it launched an activist campaign to push for changes at the airline and revive the slumping stock. The parties reached an agreement that October to ward off a proxy fight.

Pressure from the firm led to the appointment of six independent board directors and accelerated the retirement of Executive Chairman Gary Kelly. There were changes at the customer level, too, with a shift away from its open seating policy to assigned seating.

A filing shows that on Feb. 19, 2025, Southwest amended an earlier agreement with Elliott that allowed the firm to increase its exposure in the company to 19.9% of Southwest's outstanding common stock, up from 14.9% previously.

Filings over the past few months show the firm has steadily pared down its stake. The latest disclosure came as the stock kicked off a strong start to 2026, rising 27% against a 0.7% decline for the benchmark S&P 500 and a 5.1% decline in shares of peer United Airlines.

Shares surged 19% on Jan. 29 after the carrier posted strong fourth-quarter earnings and issued upbeat guidance. Southwest stock has been insulated from the recent market turmoil arising from a selloff in software stocks.

Inside Scoop is a regular Barron's feature covering stock transactions by corporate executives and board members -- so-called insiders -- as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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(END) Dow Jones Newswires

February 06, 2026 21:30 ET (02:30 GMT)

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