Call it funny or call it sad, but some folks who are trading Carver Bancorp (NASDAQ:CARV) stock don’t know a thing about the company. They only know that CARV stock’s been a fast mover lately, and they want a piece of the action.
What a shame that is. Not that I can blame anyone for wanting to get in on the meme-stock frenzy, which supposedly promises thrills and profits for nimble traders.
While not dismissing this entirely, my counterpoint is the old saying: know what you own.
If you’re holding Carver Bancorp shares, which receive a “B” grade from my Portfolio Grader, you’re actually partaking of a very special business. So, let’s dive into the specifics, starting with a survey of the share-price movement in 2021.
CARV Stock at a Glance
For years, CARV stock was what some folks might call a “steady Eddie” kind of stock. By that, I mean it stayed within a predictable range and didn’t exhibit too much volatility.
That made it ideal for retirement accounts, income investors and really, anyone seeking slow-but-reliable portfolio growth.
And if we check the five-year monthly beta of CARV stock, we’ll see that it’s 1.11, which means that the stock has tended to move about as fast as the S&P 500.
But then, if we examine what took place this year, the story changes dramatically. After hovering in the $8-to-$10 range for much of 2021, the stock suddenly shifted into overdrive.
It’s been a memorable summer for CARV stock holders, to say the least. In June and July, the share price quickly quadrupled, topping out at $42.50 on July 9.
Mind you, it’s not necessarily a great idea to go chasing after vertical price moves. It might not be too surprising that Carver Bancorp shares retraced to the $20 area by mid-July.
What could possibly have caused this price explosion? Hopefully, we can “squeeze” out the answer to this question.
Monolithic Gains
I have to credit InvestorPlace contributor Brenden Rearick for coming up with a creative phrase to describe the jaw-dropping move in CARV stock.
As Rearick put it, the stock has seen some “monolithic gains” recently. And while it’s difficult to prove this, the gains may be attributable to a retail trader short squeeze.
One social media commentator may have actually predicted that this would happen.
A tweet from investing personality Will Meade, dated June 28, set the stage for a groundswell of support in favor of Carver Bancorp:
“$CARV is now the most shorted stock trading trading with a whopping 68% short interest! Short sellers picking on Carver Bancorp, one of the largest African American owned banks. I’m long, let’s make shorts pay.”
With that clarion call, Meade cited the stock’s short float, which happened to be a whopping 68.18%.
Providing Vital Services
No doubt about it: that’s a possible setup for an epic short squeeze.
Of course, the first burst of that squeeze may already be in the rear-view mirror.
On the other hand, the meme-stock crowd could circle back and push CARV stock back up. It’s not easy to predict these things, so we don’t need to play that game.
Instead of speculating, we can focus on what we know for certain: Carver Bancorp is an American financial institution of value and renown.
The company identifies its three main services:
- Originating mortgages to residential and commercial properties
- Originating loans for the construction and renovation of commercial and residential properties
- Providing loans to business and non-profit organizations
Thus, we have a headline that’s largely getting buried: Carver Bancorp provides vital services to communities, while also offering supreme shareholder value.
And don’t worry — the company’s balance sheet is solid and improving.
As evidence of this, a Form 10-K shows that Carver Bancorp held $12.374 million in cash on deposit with subsidiaries as of March 31, 2021.
That’s a substantial increase over the $496,000 held a year prior to that date.
The Takeaway on CARV Stock
The long and the short of it is that Carver Bancorp is an important business and will undoubtedly remain so.
Furthermore, the company is in solid financial condition.
Sure, you can choose to focus on CARV stock for its meme-worthiness.
But the bigger picture reveals an investment that should stand the test of time and deserves to be on the front page, regardless of any short squeezes.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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