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 Chinese hotel operator Home Inns & Hotels Management (NAS: HMIN) sank 15% in intraday trading Wednesday on above-average volume.
So what: I couldn't track down any industry or company-specific news driving the heavy selloff, but given its volatile nature as a Chinese small cap, this kind of move isn't exactly unusual. In fact, the stock is hitting a new 52-week low today and has fallen about 45% over the past year.
Now what: I'd continue to keep my distance from the shares. While large, seemingly unwarranted price drops usually represent attractive entry points, Home Inns remains a questionable long-term opportunity. Given its low returns on assets, 25-plus P/E, and, most importantly, exposure to China's bubbly real estate market, I'd wait for a much bigger pullback before taking the plunge.
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At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Try any of our Foolish newsletter servicesfree for 30 days.We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.
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