Insiders Who Sold Stitch Fix Made The Right Call As Market Cap Slides By US$48m

Over the past year, insiders sold US$149k worth of Stitch Fix, Inc. (NASDAQ:SFIX) stock at an average price of US$3.21 per share allowing them to get the most out of their money. The company's market valuation decreased by US$48m after the stock price dropped 10.0% over the past week, but insiders were spared from painful losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Stitch Fix

Stitch Fix Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Sarah Barkema, for US$112k worth of shares, at about US$3.74 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$4.14. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was 68% of Sarah Barkema's stake. Sarah Barkema was the only individual insider to sell over the last year.

Sarah Barkema divested 46.31k shares over the last 12 months at an average price of US$3.21. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

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. It appears that Stitch Fix insiders own 13% of the company, worth about US$67m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Stitch Fix Insiders?

The fact that there have been no Stitch Fix insider transactions recently certainly doesn't bother us. Our analysis of Stitch Fix insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Stitch Fix. For example, Stitch Fix has 3 warning signs (and 1 which is significant) we think you should know about.

Of course Stitch Fix may not be the best stock to buy. So you may wish to see this free collection of high quality 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.