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 Jones Energy Inc (NYSE:JONE) dropped as much as 13% today after its largest shareholder announced it was selling shares.
So what: After the market closed yesterday, Metalmark Capital, LLC announced the launch of a 5 million share sale with an underwriter option to purchase another 750,000 shares. This morning it was announced that shares would be priced at $10.00 per share, accounting for nearly all of the drop in shares today.
It's worth noting that Metalmark is selling about 22% of its stake in Jones Energy and none of the proceeds will go to the company.
Now what: It's never a good thing when your largest shareholder sells a big chunk of shares and with Metalmark's involvement in the company this is especially worrying. The private equity firm essentially built Jones Energy into the firm it is today through a number of acquisitions and took it public in 2013. So, if the people who know the most about Jones Energy are selling, I don't see a reason investors should have a lot of confidence in the stock's recovery right now.
Travis Hoium 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.