Lawrence Cheng, a director at GameStop (GME), recently added 10,000 shares to his holdings. The buy increased his stake by 16%, and came to a total cost of $112,238.
Cheng was the last insider buyer with a 6,000 share pickup back in September. Another company director was also a buyer of 15,000 shares on the same day. There have been some sales by the company’s general counsel and another executive in the intervening months.
In total, GameStop insiders own 12.8% of shares.
The specialty retailer’s shares have been cut in half over the past year. While revenues declined 19% in the last 12 months, earnings have surged by 30%, and the company managed to make a profit in the most recent quarter.
Shares are also trading at about two-thirds their price-to-sales, a sign that the stock may be inexpensive and ready to move higher when the current downtrend ends.
Action to take: Shares are still trending lower, and are at a new 52-week low. Investors interested in shares should wait for the trend to reverse higher before making the buy.
For traders, the June $10 puts, last trading for about $1.25, could see mid-double-digit returns on a further downside for shares here. Traders should take profits if the stock starts to shift back to an uptrend.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.