Meme stock $BGFV is flying amid Reddit-induced frenzy
Big Five Sporting Goods (NASDAQ:BGFV), known as Big F***ing Value by Redditors, is up by 10% on Tuesday, closing in on an all-time-high of just above $42.
The stock is the latest short-squeeze by Reddit investors who previously went after institutional investors by collectively buying shares in Gamestop and AMC Entertainment.
Over the past month, $BGFV, “the ultimate dark horse that hedge funds don’t want you to know about”, is up by 65.13%.
Just keep running. You (probably) won't regret it.— Big 5 Sporting Goods (@big5since55) November 6, 2021
Grab your next pair of 🏃♀️ shoes at a price you'll 💙#big5 #runner #fitness #run #runningshoes #marathontraining #weekenddeals #5k #10k #halfmarathon #marathon pic.twitter.com/Aoho6Z2Z9L
Within the thread linked below is an outline of a plan of how Redditors could participate in the multi-faceted strategy to squeeze out short-sellers.
Hard to understand how this ends well for $BGFV short sellers. Seems like a repeat of $GME except with shareholder friendly mgmt that doesn't seem to need a RC to step-in. Hard to understand the confidence to short nearly half the float, what is the short thesis? Why do this? pic.twitter.com/SpqfaMTuer— DOMO Capital Management, LLC (@DOMOCAPITAL) November 10, 2021
However, unlike companies Reddit investors have targeted in the past, $BGFV has sound fundamentals as an investment opportunity.
For a start, the company has a strong balance sheet and has repurchased over 100,000 shares in Q3. Secondly, $BGFV boasts a positive earnings-per-share figure, as well as a strong price-to-earnings ratio. Finally, it is a possible target for an acquisition and it has advantageous political and supply chain conditions.
In "meme" world, there's a difference between buying cash-heavy businesses repurchasing shares ( $GME circa 2020, $BGFV) and cash incinerators with massive piles of debt ( $AMC) and insiders racing to dilute you.— Kingdom Capital (@kingdomcapadv) November 9, 2021
These factors, combined with massive short interest presenting GME like technicals, mean there is a strong argument that it is undervalued.
The $BGFV battle is epic - fun! Most important thing is the $ amount of SI, not the % (IMO). Special divi was smart by mgmt, but at end of day with about 9M shares short, that's only a $9M payment to hold position. As with $GME, a higher stock price is what will force the cover. pic.twitter.com/b1tYUgvm8q— DOMO Capital Management, LLC (@DOMOCAPITAL) November 5, 2021