Unfortunately for its shareholders, it appears as though the a2 Milk Company Ltd (Australia) (ASX: A2M) share price is on course for another sharp decline today.
In early trade the fast-growing dairy company's shares are down 5% to $6.46.
What happened?
With no news out of the company or any of its infant formula rivals, today's decline appears to be a case of more traders taking profit.
Its shares have come under significant selling pressure after it emerged that substantial shareholder Colonial First State Asset Management had trimmed back its holding from a 6.4% stake to a 5.4% stake late last month.
But it isn't just a2 Milk that is feeling the pressure. The shares of dairy processor SYNLAIT FPO NZX (ASX: SM1), a2 Milk's supplier, have also fallen heavily. They are down over 7% today on top of a sharp decline yesterday.
Elsewhere, the Bellamy's Australia Ltd (ASX: BAL) share price is down 1% to $11.42 and the Bubs Australia Ltd (ASX: BUB) share price is almost 6% lower at $1.01.
Should you buy the dip?
While a2 Milk's shares have fallen sharply in the last couple of weeks, I would suggest investors resist buying the dip at this stage and wait for its annual general meeting on November 22.
The company is widely expected to provide a trading update at the meeting. Should this update fail to justify its incredible share price rise and the premium its shares trade at today, there is a chance that its shares could come under further selling pressure.
