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 specialty finance company Encore Capital Group (NAS: ECPG) were getting trounced today, falling as much as 15% in intraday trading on news that a major shareholder is selling.
So what: In a press release after the market closed yesterday, Encore announced that a major shareholder, JCF FPK -- a subsidiary of private equity firm J.C. Flowers & Co. -- would be selling 3.6 million shares. The offering was priced this morning at $24.35 per share, which was 7% below yesterday's closing price and is expected to close Nov. 8.
Now what: J.C. Flowers is generally known as a sharp investing group, so for Encore shareholders to see the fund selling out isn't a great sign. Plus, the sale itself will put pressure on the stock as the market digests the shares that the fund is dumping.
However, there could be any number of reasons why the fund might be selling, and many of them may not be reason for investors to flee. So the sale may not be an excuse to panic, but it could be a good reason for current shareholders to revisit the stock and make sure that their investment thesis still stands.
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