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 Chinese hotel operator Home Inns & Hotels Management
So what: I couldn't track down any industry or company-specific news driving the heavy selloff, but given its volatile nature as a Chinese small cap, this kind of move isn't exactly unusual. In fact, the stock is hitting a new 52-week low today and has fallen about 45% over the past year.
Now what: I'd continue to keep my distance from the shares. While large, seemingly unwarranted price drops usually represent attractive entry points, Home Inns remains a questionable long-term opportunity. Given its low returns on assets, 25-plus P/E, and, most importantly, exposure to China's bubbly real estate market, I'd wait for a much bigger pullback before taking the plunge.
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