Why StoneMor Partners' Shares Plunged
Jul 24th 2012 5:03PM
Updated Jul 24th 2012 5:12PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of cemetery specialist StoneMor Partners (NAS: STON) were looking stone cold today, as they fell as much as 10% in intraday trading.
So what: The trigger for the selloff appears to be a blog post on Seeking Alpha that attacks StoneMor's business model and raises concerns over the recent departure of the company's retirement-age chief financial officer. The author draws particular attention to the flows into the company's merchandise trusts, claiming that it's controlling those flows to manage earnings. Notably, the author also discloses that he's short StoneMor stock.
Now what: Should StoneMor investors take heed of these warnings? For StoneMor longs, it certainly wouldn't hurt to read over the concerns and make sure their investment thesis still holds. Of course, frequent readers of Seeking Alpha may have run across a similar article with similar concerns from the same author back at the end of last year. At the time, another Seeking Alpha blogger -- with a long stake in StoneMor -- addressed some of the concerns in another blog post.
In any case, it's important to keep in mind that in the stock market there are always buyers and sellers, so it should never be too surprising to see a bear case on even the best companies or a bull case on the worst.
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