On Thursday afternoon, we put out an alert on Carver Bancorp Inc. (CARV). It ended the day at $5.05, up 150% and about flat to when we recommended it. However, we have held overnight because we believe there is a strong chance that it can continue a huge run into its second day of hot trading like what we saw with Diana Containerships Inc. (DCIX) on November 3 through 7 and CHF Solutions, Inc. (CHFS) Wednesday and Thursday. At a minimum, the pattern suggests that CARV could challenge Thursday's high of $7.95. Other high-flying low-float stocks that ran a lot over the past couple of days include China Advanced Construction Materials Group, Inc. (CADC), SemiLEDs Corporation (LEDS), OptimumBank Holdings, Inc. (OPHC), Meridian Waste Solutions, Inc. (MRDN) and Clean Diesel Technologies, Inc. (CDTI).
This is a view of the ownership structure of the three largest gainers on Thursday, CADC, OPHC and CARV:
CARV has 3.75 million shares outstanding which is more than CADC and OPHC. But its insider and institutional ownership is far higher than the other two. This not only gives credence to it being a more legitimate company because shares are held close as opposed to being spread among retail traders, it also really reduces the float. CARV has a float of just 1.37 million shares which is actually less than CADC's float of 1.46 million shares. But the most striking stat is the volume. CADC rose 265% on 21.6 million volume. OPHC rose 234% on 3 million volume. CARV rose 150% on only 500K volume. Imagine if CARV has millions of volume traded in a day.
Look at the price history of OPHC:
On November 9, OPHC experienced a temporary 100% move on 227K volume. Like a warning tremor before the full blown explosion that took place on Thursday. CARV's move on Thursday looks more like that tremor and the big day could be still to come.
With CARV being around $5.00 it trades at market cap of under $19 million. Look at the last SEC filing. The 10-Q for the quarter ended June 30, 2017 was filed November 14. The company has been filing financials late, but at least they are finally getting filed. This could be another reason why the stock is going up since investors are happy that is this happening. The company had a net loss of $641,000. But that is a drop in the bucket compared to the balance sheet:
The assets are cash, investments and mortgages which should be relatively liquid. As long as the housing market doesn't collapse overnight like in the mid-2000's this is not an issue. The company has $47 million in total equity, more than double its market cap. There is preferred stock which complicates things but overall as a business, CARV is in way better shape than usual low float stocks which always have to dilute their shares. So CARV looks like a strong bet to continue its run. With a $19 million market cap you're not going to get a perfect company. But CARV's financials are at least decent. Usually at such a low market cap you can assume a large burn rate and maybe negative equity or some other major problem.
This is a view of the ownership structure of the three largest gainers on Thursday, CADC, OPHC and CARV:
CARV has 3.75 million shares outstanding which is more than CADC and OPHC. But its insider and institutional ownership is far higher than the other two. This not only gives credence to it being a more legitimate company because shares are held close as opposed to being spread among retail traders, it also really reduces the float. CARV has a float of just 1.37 million shares which is actually less than CADC's float of 1.46 million shares. But the most striking stat is the volume. CADC rose 265% on 21.6 million volume. OPHC rose 234% on 3 million volume. CARV rose 150% on only 500K volume. Imagine if CARV has millions of volume traded in a day.
Look at the price history of OPHC:
On November 9, OPHC experienced a temporary 100% move on 227K volume. Like a warning tremor before the full blown explosion that took place on Thursday. CARV's move on Thursday looks more like that tremor and the big day could be still to come.
With CARV being around $5.00 it trades at market cap of under $19 million. Look at the last SEC filing. The 10-Q for the quarter ended June 30, 2017 was filed November 14. The company has been filing financials late, but at least they are finally getting filed. This could be another reason why the stock is going up since investors are happy that is this happening. The company had a net loss of $641,000. But that is a drop in the bucket compared to the balance sheet:
The assets are cash, investments and mortgages which should be relatively liquid. As long as the housing market doesn't collapse overnight like in the mid-2000's this is not an issue. The company has $47 million in total equity, more than double its market cap. There is preferred stock which complicates things but overall as a business, CARV is in way better shape than usual low float stocks which always have to dilute their shares. So CARV looks like a strong bet to continue its run. With a $19 million market cap you're not going to get a perfect company. But CARV's financials are at least decent. Usually at such a low market cap you can assume a large burn rate and maybe negative equity or some other major problem.
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Disclosure: We are long CARV
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