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Why is the Aristocrat Leisure trading volume surging higher on the ASX?

The Aristocrat Leisure Limited (ASX: ALL) share price climbed 0.94% higher on the ASX yesterday, but what really caught my eye was the higher than usual trading volume that the stock saw throughout the day.

What was behind the high Aristocrat Leisure trading volume yesterday?

While roughly 1% is not a huge move for any stock within the S&P/ASX 200 (INDEXASX: XJO) index, Aristocrat Leisure’s daily trading volume totalled 7,338,027 shares – nearly 3–5 times higher than its usual 1,500,000 to 2,500,000 average of late.

While Aristocrat’s trading volume surged to 7,335,240 on 4 July 2019 and 6,466,788 on 19 March 2019, these have been days where the company has made announcements to the market.

On 4 July 2019, Aristocrat announced to the market that it was commencing legal proceedings against Ainsworth Game Technology Limited (ASX: AGI) claiming infringement by Ainsworth of Aristocrat’s intellectual property rights and breach of Australian Consumer Law.

Similarly, March 2019 came just days before the company’s half-year earnings results as investors (and insiders) moved to position themselves for Aristocrat’s half-year release.

But with no similar announcements immediately obvious, it’s hard to see why Aristocrat shares were trading so hotly on the ASX during yesterday’s trade.

It could well be investors looking to position ahead of Aristocrat’s full-year results release in August or perhaps insiders looking to offload shares at a decent price.

How has the Aristocrat Leisure share price performed?

So far this year, the Aristocrat Leisure share price has climbed 38.9% higher to be currently outperforming the ASX 200 and many of its peers.

While Aristocrat certainly hasn’t been the top performer on the market, it has done well to bounce back after a shocking end to 2018, which saw its share price slide from $33.06 per share to just $21.6 as at year-end.

Foolish takeaway

While Aristocrat has its fair share of earnings headwinds, the stock could still be good value at $30.00 per share.

I’d personally be waiting until after the company’s results release in the August reporting season before buying into the stock, particularly given the unusual trading activity by other investors in the market.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.

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