Selling Sight Sciences Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Sight Sciences, Inc.'s (NASDAQ:SGHT) stock price has dropped 11% in the previous week, but insiders who sold US$3.4m in stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of US$4.01 is still below the current share price.

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.

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Sight Sciences Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Chairman, Staffan Encrantz, for US$2.1m worth of shares, at about US$3.73 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of US$2.81. So it may not tell us anything about how insiders feel about the current share price.

In total, Sight Sciences insiders sold more than they bought over the last year. The average sell price was around US$4.01. Insider selling doesn't make us excited to buy. However, we do note that the average sale price was significantly higher than the current share price (which is US$2.81). You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

See our latest analysis for Sight Sciences

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Sight Sciences Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of Sight Sciences shares over the last three months. We note insiders cashed in US$148k worth of shares. On the other hand we note insider Manohar Raheja bought US$53k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Sight Sciences insiders own about US$42m worth of shares. That equates to 27% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Sight Sciences Insiders?

Unfortunately, there has been more insider selling of Sight Sciences stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 3 warning signs with Sight Sciences and understanding these should be part of your investment process.

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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.