Why Thoratec Shares Dropped

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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 medical device manufacturer Thoratec (NAS: THOR) skipped a beat today, falling as much as 13% before making a substantial comeback.

So what: To a large extent, it looks as if Thoratec's plunge today was a misunderstanding. Make no mistake about it: The news that caused the hubbub -- that there is a potentially serious problem with the original instructions provided with Thoratec's HeartMate II -- is very real. However, it's not new news.


According to a press release from Thoratec, the company began alerting doctors back in February about the issue, and it was originally posted on the Food and Drug Administration's site in mid-March. But apparently today it was reposted on the FDA's site, and that put it back on the radar of the newswires. Investors quick on the trigger no doubt reacted to the word "recall" that was used in many of the news reports and helped drive the stock down in early trading.

Now what: There are at least two lessons that can be pulled from this today. First, being quick on the trigger isn't necessarily a good thing when it comes to investing. Second, it behooves stock investors to keep up on the news of the companies they own. In this case, investors who were up to date on what's been going on at Thoratec would have known that today's "news" wasn't anything new to sweat about.

Want to keep up to date on Thoratec?Add it to your Watchlist.

At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

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