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 (NYSE:EMES) 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.