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 energy services company Emerge Energy Services LP fell 11% today after announcing a share sale.
So what: A little over 3.5 million common units are being sold by "certain selling unitholders" with an option for underwriters to sell another 527,307 in the next 30-days. The company will not get any proceeds and the number of shares outstanding won't change. The offer price of $109.06 per share was only 3% below yesterday's closing price but investors clearly didn't like a big owner selling shares.
Now what: Insiders or large shareholders selling stock can be a bad sign for investors because they often know more information than the typical investor about the company's long-term prospects. While this doesn't change the investment thesis, it should at least give investors pause and make them reevaluate Emerge Energy. I wouldn't be a big buyer today because there's selling pressure on shares but keep an eye on what these sellers do now that shares are well below their offer price because if they're willing to sell at a significantly lower price it could be a bad sign.
A better buy today
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.
The article Why Shares of Emerge Energy Services LP Plunged Today originally appeared on Fool.com.Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.