Big moves up and down in share prices need to be supported by increasing volume or the move will rarely be sustainable. One way to determine strong trends and get on board long upward or downward moves is to look at stocks that are trading a large amount of volume early on in the day, when compared with their average volume. This will help us set the best moves apart from the rest. (For background reading, see Volume Rate Of Change.)

Here are five stocks that were trading on very large volume by noon today. Let's take a closer look at one that has seen a large share price change as well.

Company Shares Traded* % of Average Volume
(3 month)
Hilb Rogal & Hobbs(NYSE:HRH) 1,490,235 302%
General Electric
(NYSE:GE)
96,240,712 134%
Monsanto
(NYSE:MON)
8,472,399 117%
Mosaic
(NYSE:MOS)
8,588,951 108%
KBR Inc.
(NYSE:KBR)
2,551,709 98%
* Data as of 9:56 am EST October 2, 2008



Capitalizing on Fear

General Electric can be thought of as the picture of diversification. If we consider GE to be a work of art for a moment then the world has recently witnessed one of its greatest collectors adding to their collection of masterpieces. On Monday, GE announced a deal to sell $3 billion in preferred shares to billionaire investor Warren Buffett's firm Berkshire Hathaway (NYSE:BRK-A). The GE sale is part of a larger plan that includes selling $12 billion in common stock to investors at $22.25. The common stock offering and the Buffett announcement were the two catalysts behind GE's unusual spike in volume.

The Oracle of Omaha is wasting little time taking advantage of the fear in the market with Berkshire Hathaway's $3 billion investment in GE preferred shares. The preferred shares will pay an annual dividend of 10% and are callable after three years at a 10% premium. With one investment, Berkshire Hathaway increases its exposure to GE's broad array of industries including infrastructure, commercial finance, healthcare, consumer finance by way of GE Money and entertainment by way of NBC Universal. Berkshire Hathaway also gets exposure to a global company that is already generating more than 50% of its revenue outside of the U.S.

First Half of 2008

For the first six months ending June 30, GE's total revenue increased 9% over the prior year to $89.2 billion. Infrastructure revenue of $32.5 billion led the way representing a 24% increase over the same period a year ago. Part of the revenue increase was due to a combination of GE's acquisitions of Aviation companies, increased sales of equipment and chemicals used to treat water, increased sales of transportation equipment and a weaker U.S. dollar. Examples of GE Infrastructure offerings include everything from environmentally friendly wind turbines and solar panels to oil & gas exploration equipment. GE stock is down 33.35% since the beginning of the year while the SPDRS S&P 500 ETF (AMEX:SPY) is down 19.83% in comparison.

Not the first big investment in GE

Earlier in the year GE entered into an agreement with an Abu Dhabi government investment company, Mubadala Development Co., for a $4 billion capital investment in its commercial finance business. The Mubadala deal is intended expand upon lending opportunities in the Middle East and Africa. Likewise the infusion from Buffett and common stockholders is meant to enhance liquidity and allow GE to assume an aggressive posture during the current economic downturn.

Instructions on Building a Portfolio

GE marks Buffett's third investment in recent weeks behind his $5 billion investment in Goldman Sachs (NYSE:GS) and his $4.7 billion acquisition of Baltimore, MD based Constellation Energy (NYSE:CEG). Investor's should note that in classic Buffett fashion the companies he's acquiring or investing in make products and offer services he feels comfortable with.

Final Thoughts

The liquidity crunch that sent Wall Street firms into a downward spiral is also creating opportunity for investors with a vision for the future. The volatility in the stock is likely to continue since institutional and individual investors alike find it hard to not follow the investment decisions of one of the world's greatest investors.

To learn more about Warren Buffett, and how he invests, read Warren Buffett: How He Does It and Warren Buffett: The Road To Riches.
Related Articles
  1. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  2. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  3. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  4. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  5. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  6. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  7. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  8. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  9. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  10. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center