Central European Distribution Shares Dropped: 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 vodka producer and distributor Central European Distribution (NAS: CEDC) are down 10% today after a great week last week.

So what: Shares surged early last week on word that private investor Mark Kaufman, the former CEO of spirits company Whitehall Group, had taken a major stake in the company. But investor excitement about a buyout has fallen off, and the turmoil in European markets didn't help today.

Now what: The bottom line is that momentum from last week's run-up is gone. Without a buyout offer, shares were only up on speculation and fear is back in the market today. Shares were hovering around $5.50 before the bounce, so there's definitely downside risk for shares from here. I am not buying into the buyout speculation and with earnings expectations continuing to fall, I just can't get excited about the company's valuation either.

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At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Motley Fool newsletter services have recommended buying shares of Central European Distribution. 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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