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: Small independent onshore oil and gas producer Magnum Hunter Resources Corp (NYSE: MHR) stock jumped 12% at one point today, before cooling a little but still finishing the day up 10%:
So what: Frankly, there wasn't any material news out there, though other outlets referred to oil prices being up on the day. That's not entirely true, as Brent -- the international benchmark -- fell again, while American benchmark West Texas Intermediate was relatively flat. The reality is, Magnum Hunter Resources is a relatively small oil producer that focuses on three specific regions. Trading activity was only slightly high today, versus trading volume over the past several months.
Now what: It's important to understand that oftentimes no news is, well, no news. Stock prices can move in big ways, and sometimes without any specific attributable reason. Because Magnum Hunter is a relatively small company, this can make its stock more susceptible to bigger moves. Add in all the speculation around oil prices, supply and demand concerns, and the 65% drubbing the stock has taken over the past year, and you can expect to see more volatility without a specific reason going forward.
Instead of getting too caught up in the movements of the company's stock, you'll rest easier -- not to mention make better investing decisions -- if you crack open the company's most recent earnings report. It's a lot more important to understand whether or not the company has enough capital to sustain itself in the current oil price environment.
