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
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.
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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.