Retail investors are selling this rising FTSE 100 stock. What's going on?

Last year, the International Consolidated Airlines Group (LSE:IAG) share price is up 36%. However, last week the FTSE 100 The share was one of the top stocks used by investors Hargreaves Lansdowne it has been sold. Given that it wasn't on the top buy list, it shows me a clear message. Here's what I think is happening.

Banking is a specific benefit

A rally over the past year has propelled the stock further, breaking 200p for the first time since spring 2021. So even before I consider anything specific to the company, I see one reason for interest in the sale.

Most investors (myself included) will have a target price for a particular stock. Especially when it comes to value stocks, I will have an idea of ​​where I think the fair value should be, which is when I can think of starting to book some profit.

During this epidemic, the pilot was severely beaten. However, it has proved cheap, especially when it falls below 100p in 2022. So for some bought at this level, 200p may be marked as the price where taking the risk on the table makes sense.

Don't get me wrong, I will still be investing for decades to come. But I can totally understand why some investors would want to reduce their exposure to the company given the unattainable returns that others would have sat on.

Falling in love

In terms of IAG specifically, I think the idea is brilliant. However, some may be concerned that the company's growth path is slowing. Back in 2020 and 2021, the business posted huge losses as air travel was heavily supported. Since then, growth back to pre-pandemic activity has been rampant. It managed to achieve this last year.

However, the latest results for the first half of 2024 showed a modest operating profit ahead of the same period last year. Profit after tax was slightly lower than in H1 2023. So some investors may feel that the business will falter now that it has fully recovered from the pandemic. Therefore, they may be selling the stock for better growth opportunities elsewhere.

Why is the stock still rallying

Apart from the selling activity, it is clear that there are some buyers coming in as we have not seen any kind of crash in the share price.

Even though the stock has risen significantly over the past few months, the price-to-earnings ratio is still below what I would call fair value. I use the 10 benchmark, with IAG currently at 4.98. So the share price has a lot of room to run before I call it overvalued.

In addition, although the profit of H1 did not change much from last year, the total debt was significantly reduced by 30% from the same period in 2023. This is important because less debt lowers interest costs. This frees up cash flow that can be used in other areas of the business to promote growth. Ultimately, this should help translate to a higher share price in the future.

So while others are selling the stock, if I were in charge I would hold on to it as I think we could gain more.