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Why the Vita Group Limited share price rocketed 14% today

One of the biggest movers on the market today has been the Vita Group Limited (ASX: VTG) share price.

In afternoon trade the embattled retailer’s shares have rocketed a staggering 14% to $1.10.

What happened?

Today’s gain relates to news that Vita’s CEO Maxine Horne has acquired a total of 3.2 million shares in the company in the last few days.

This has boosted her stake in the company to 28.5 million shares or approximately 18.7% of the float.

Vita’s shares have fallen sharply since it emerged that Telstra Corporation Ltd (ASX: TLS) wishes to organise its company-owned and licensed stores into geographic clusters.

This would mean that Telstra licensees would be invited to apply to build their Telstra store networks within a particular geographical region. Possibly putting Vita at risk of losing some of the 107 Telstra retail stores it currently operates.

It then received an even bigger blow last month when the telco giant advised that it intends to cut its remuneration by 10% each year for the next three years.

But judging by the number of shares she has acquired, it would appear as though Maxine Horne feels that the sell-off has been overdone and that Vita’s shares are a bargain.

Insider buying of this magnitude is almost always seen as a bullish signal, so I can’t say I’m surprised to see its shares rally today. After all, they are changing hands at a little over 4x trailing earnings.

Whilst I’ll continue to keep a safe distance from Vita, I’ll certainly be keeping it on my watchlist and watching on with keen interest.

In the meantime I would suggest investors look at these high-flying blue-chips which continue to produce the goods. I'm tipping them for big things this year.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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