Insider Activity: GameStop (GME)

Multiple directors add shares of struggling game retailer.

Two directors took the opportunity to pick up shares of GameStop (GME) near all-time lows. Director Kathy Vrabeck bought 20,000 shares, paying nearly $106,000 to do so, and director Raul Fernandez bought 4,900 shares, paying just under $25,000.

The buys come after the company eliminated its dividend earlier in the year and an activist investor targeted the company, suggesting it make a huge buyback with its cash hoard to unlock shareholder value.

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  • Other directors at the company have been buyers in recent weeks, and the last insider sales occurred in 2017 at prices at least 70 percent higher than where shares currently trade. Fears surround the retail operation as video games have largely shifted to a digital distribution model.

    Action to take: We like value proposition in shares right now, and in the physical retail space we see at least one company per niche surviving the largely-completed push to digital. Stock buyers should look to add shares around $5.50.

    Speculators may want to consider the April 2020 $6 calls to bet on further upside. Trading around $1.10, they’re a cheaper way to control 100 shares over the next few months relative to buying shares, so on the off chance that the company does falter, it would cost traders less to play a bounce in shares.