BigAir Group Limited drops 28% in 3 months: Should you buy?

In early morning trade today, shares of junior fixed wireless broadband provider BigAir Group Limited (ASX: BGL) fell as much as 9%, before recovering dramatically to trade over 2.5% higher.

Shares in BigAir have been on a downward spiral over the past three months, falling 28%. However, the company’s response to an ASX price query issued this morning has given shareholders – myself included – a reason to catch their breath. The group said it, “has no explanation for the recent trading in its securities.”

For a normal business, no news is usually good news. However when it comes to small-cap technology stocks changing hands on 22 times trailing earnings per share, some investors can get a little nervous when they don’t hear anything and their stock holdings suddenly plummet.

We question our original thesis and think to ourselves, “Does the market know something I don’t?” or “Maybe if I get out now I’ll avoid further falls.”

In extreme cases, investors may even draw extraneous parallels between other industry news, such as the ACCC’s comments on rival telcos, Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPM), possibly building their own fibre optic networks.

Should you buy, hold, or sell BigAir Group?

BigAir is a $120 million company which has grown at a very good pace over the past eight years and continues to boast solid growth prospects moving forward. The company is well managed, has tailwinds at its back, operates in a niche market and is likely to realise the full benefit of its recently acquired businesses in the future. Its vital shareholders remember these things when volatility presides over one of their holdings.

Indeed if investors panicked and sold out on December 18 2009, when BigAir’s share price fell 9% in one day of trading, they would have missed out on the 545% in capital gains since then. In addition to the 300% in dividends.

The recent sell off in the company’s securities could be a result of a significant sell down, something more sinister or it could be nothing more than volatility. Until I find reason to think otherwise, I believe today’s share price offers compelling value to long-term focused investors.

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Motley Fool Contributor Owen Raszkiewicz owns shares of BigAir Group Limited.  

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