Ebix Shares Plunged: What You Need to Know

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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: Insurance software designer Ebix (Nasdaq: EBIX  ) seems to be in dire straits today as its share fell as much as 10% on a sudden volume spike.

So what: Ebix has no news to speak of today, nor can I find any evidence that the stock has been talked about on radio or TV shows. The strong, sudden trading surge suggests selling action by a large investor, perhaps one not used to (or concerned about) the market-moving power of large orders on thinly traded stocks like Ebix.

Now what: 87% of Ebix's float is held by institutional investors, with about a dozen of those holdings large enough to cover this morning's unusual action. But before jumping to conclusions about someone like Vanguard or BlackRock losing faith in the company, consider that these shares had gained a market-stomping 55% over the past six months before today's fall -- and 1,200% over the past five years. Even now, the stock is in the black and above the S&P 500 average in March, thanks to another stellar earnings report, so some profit-taking may be in order, even if it triggers a 10% price swing. 

Interested in more info on Ebix? Add it to your watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Ebix is a Motley Fool Rule Breakers recommendation. The Fool owns shares of Ebix. 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 is investors writing for investors.

Read/Post Comments (3) | Recommend This Article (8)

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  • Report this Comment On March 10, 2011, at 12:46 PM, naandrews wrote:

    Thanks for the update on EBIX Anders.

    I'm wondering, though, if TMF would be wise to wait until the stock market has closed before writing one of these "10% articles" (since, when I last checked, the stock had recovered a bit and was only down 6%?).

    Regardless, as you write, the stock has done great recently, and the company seems to be doing well (we'll get an update when their next earnings report comes out), so we shouldn't let these ups and downs faze us too much.

    Neil (very long EBIX, one of my favorite companies)

  • Report this Comment On March 10, 2011, at 3:58 PM, midnightmoney wrote:

    waiting with baited breath for tuesday's earnings report

  • Report this Comment On March 10, 2011, at 5:46 PM, Borbality wrote:

    also very hopeful of the earnings report.

    I didn't buy at the best time so I'm only up about 5%, but I like the company a lot.

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