Noah Holdings Shares Got Temporarily Crushed: What You Need to Know
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 China-based wealth management specialist Noah Holdings (NYS: NOAH) crashed in intraday trading to an 11.9% drop at worst, then rebounded to a 6.8% gain at the top and now trade roughly where they were after Friday's closing bell.
So what: With no company-specific news in circulation, all evidence points to manipulative trading in this case, either by robotic algorithms or a deft human hand. Normally shifting hands in small batches of a couple hundred shares at a time, Noah saw a few more substantial trades clearing out the order book at about 10:20 a.m. Eastern time -- and then a massive order for 49,000 shares taking advantage of near-bottom prices.
Now what: Noah is a thinly traded stock at the best of times, which is ironic considering the line of business the company is in. That mega order covers about one-third of an average day's total trading volume, and shows how easily a well-heeled investor can wreak havoc on low-volume stocks. Unless you truly have unique insights into why Noah would be a superior stock to own in spite of these shenanigans, you'll probably be happier owning American counterparts such as Bank of New York Mellon (NYS: BK) , Ameriprise Financial (NYS: AMP) , or Kohlberg Kravis Roberts (NYS: KKR) , all of which sport between 10 and 100 times the trading volume of Noah -- and are orders of magnitude more difficult to manipulate.
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At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. 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 is investors writing for investors.
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