On the surface, GameStop appears to be doing well, even gathering positive assessments from financial analysts on its prospects for the holidays in a weakened economic market.
But, according to an article on Gamasutra, GameStop Director Leonard Riggio has sold 2.3 million shares of company stock, netting him more than $60 million, and dropping his stake in the company from 6.9 percent to 5.5 percent. Riggio is also founder and board chairman of Barnes & Noble.
From Gamasutra:
"Unless he desperately needs $60 million," it appears that he doesn't think the stock is going to be performing very well, insider trading firm Form4Oracle co-founder Alex Romayev told financial magazine Barron's. "He's got a lot bigger stake in Barnes & Noble. Clearly he thinks selling GameStop is better than selling Barnes & Noble."
Even more interesting was a note at the end of the Gamasutra story:
But Romayev told Barron's that the last time Riggio made a GameStop shares sale not related to options, he divested just in time to avoid a 62 percent loss.
Comments
Re: GameStop Director Shedding Shares
Maybe he wants to buy Borders?
Re: GameStop Director Shedding Shares
Its only 1.2 or so percent hes selling, I don;t see much of a problem here unelss the stock drops in price in the enxt 6 months.
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Re: GameStop Director Shedding Shares
If the Director of a company sells off $60 million of their own shares, what do you think will happen to the company share price? It won't drop in the next 6 months. It'll drop in the next 6 hours. Which is in fact precisely what's been happening. Riggio sold on Oct. 8 when the price was at a historic high for the past 30 days. It's been dropping ever since.
Re: GameStop Director Shedding Shares
yep. A major share holder selling stock is a very bad sign for most traders and tehy will attempt to ditch it thus lowering the value.
Lets just see if he buys it all back + some for $30 million.
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Re: GameStop Director Shedding Shares
But Romayev told Barron's that the last time Riggio made a GameStop shares sale not related to options, he divested just in time to avoid a 62 percent loss.
Isn't that the very definition of 'Insider Trading'?
Re: GameStop Director Shedding Shares
It sounds like it.
Back in the 80's Ray Kassar sold a bunch of his stock right before announcing Atari wasn't on track with Q4 projections right before the videogame crash. He was investigated but determined to be innocent of insider trading, and he even gave the $$ back. By that time, however, the damage had been done.
In either case, if it isn't insider trading, then it's just plain stupid timing.
Re: GameStop Director Shedding Shares
I'm kinda wondering myself why the SEC didn't jump all over that one.
Re: GameStop Director Shedding Shares
The SEC has never had a very good track record of going after insider trading unless someone famous is involved. For the most part the 'sexy' factor is just too low.
Re: GameStop Director Shedding Shares
I think the cases of outsiders trading on information from insiders are more frequently prosecuted. It's not that easy to make a insider trading case against an insider. Who can tell when they trade on publicly availabale information as opposed to information peculiarly within their knowledge?