GameStop Director Confidence Waning in $60m Stock Sale?

GameStop video games retail storefront

GameStop director and Barnes & Noble chairman Leonard Riggio just sold a considerable chunk of the Grapevine, Texas based video games retailer--$60.2 million, to be exact. A lack-of-confidence vote? A massive money grab? Both? Conspiracy theories to the ready!

Riggio's actually my old boss, in a manner of speaking (and several dozen middle-managerial layers removed). It's been a decade and a half, but I managed a Software Etc. back when the company was called Neostar, before they filed for Chapter 11 (around the time of an awkward, weepy annual manager's conference) and eventually collapsed into full-on asset-dumping Chapter 7 bankruptcy. Riggio swooped in after everything collapsed (despite pleas to get involved earlier), avoided the bad debt, snapped up the leftovers, closed the least profitable stores, and went on to oversee the rise of one of the largest independent video games retailers in the world.

On October 6th, Riggio sold 2.3 million shares of his prior 11.4 million at an average of $26.72, leaving him with 9.1 million shares--a drop from a 6.9% stake to 5.5%.

A spokesperson for Barnes & Noble told Barron's that Riggio sold the shares for "tax planning," but analyst Alex Romayev was more negative, suggesting the sale reflects poorly on GameStop's stock--up in recent months, but still substantially below the stock price half a year ago.

"He's got a lot bigger stake in Barnes & Noble," said Romayev. "Clearly he thinks selling GameStop is better than selling Barnes & Noble."

Wedbush Morgan analyst Michael Pachter upgraded GameStop from "neutral" to "outperform" on October 8th, and told Barron's yesterday that he wasn't sure why Riggio would sell now.

"The only thing I can tell you is that he probably had something better to do with the money," said Pachter. "I feel sorry for these guys who can't live on anything less than $20 million."

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