Insiders at SkyWater Technology, Inc. (NASDAQ:SKYT) sold US$4.7m worth of stock, a potential red flag that needs to be monitored

While SkyWater Technology, Inc. (NASDAQ:SKYT) shareholders have had a good week with the stock up 13%, they shouldn't let their guards down. The fact that insiders chose to dispose of US$4.7m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

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.

View our latest analysis for SkyWater Technology

The Last 12 Months Of Insider Transactions At SkyWater Technology

In the last twelve months, the biggest single sale by an insider was when the Chief Government Affairs Officer and Senior VP & GM of SkyWater Florida, Brad Ferguson, sold US$885k worth of shares at a price of US$11.52 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$13.98. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 22% of Brad Ferguson's holding.

SkyWater Technology insiders didn't buy any shares over 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!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

SkyWater Technology Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at SkyWater Technology. Specifically, insiders ditched US$1.0m 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.

Does SkyWater Technology Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. SkyWater Technology insiders own 18% of the company, currently worth about US$111m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At SkyWater Technology Tell Us?

Insiders sold SkyWater Technology shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Our analysis shows 5 warning signs for SkyWater Technology (1 is a bit concerning!) and we strongly recommend you look at these before investing.

Of course SkyWater Technology 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, but not derivative transactions.

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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.