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.
Jason Hall has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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 has a disclosure policy.
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