Insider Traders Lose US$288k As Cutera Drops

The recent price decline of 16% in Cutera, Inc.'s (NASDAQ:CUTR) stock may have disappointed insiders who bought US$346.3k worth of shares at an average price of US$9.89 in the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$58.1k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Cutera

The Last 12 Months Of Insider Transactions At Cutera

The President Taylor Harris made the biggest insider purchase in the last 12 months. That single transaction was for US$297k worth of shares at a price of US$9.91 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$1.66). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Happily, we note that in the last year insiders paid US$346k for 35.00k shares. But insiders sold 63.60k shares worth US$165k. Overall, Cutera insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Cutera is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Cutera Insiders Are Selling The Stock

The last three months saw significant insider selling at Cutera. In total, Executive VP & Chief Technology Officer Michael Karavitis dumped US$165k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From what we can see in our data, insiders own only about US$186k worth of Cutera shares. This level of insider ownership is notably low, and not very encouraging.

What Might The Insider Transactions At Cutera Tell Us?

An insider sold stock recently, but they haven't been buying. On the other hand, the insider transactions over the last year are encouraging. But we'd like it if insiders owned more stock, overall. So the company doesn't look great on this analysis. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 6 warning signs for Cutera you should be aware of, and 3 of them are significant.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com