First off, I love you crazy people.
BGFV
What else could I possibly add to the glorious DD your fellow redditors and retail warrior brethren have already said?
If you are reading about BGFV for the first time, or have been sitting on the side lines watching the crazy, let me summarize why BGFV is the greatest squeeze potential in the market currently.
- High SI. How high? First lets look at the outstanding share and float. 22 & 21 million respectively. 9million + shorts, but we’ll go with 9mil. Thats a 40% & 42% SI respectively. Why is the outstanding important? This isn’t PROG with 152 million outstanding shares that’s about to drop the SI of PROG down to 14% after Nov 20th. No insider or institutions can be randomly added into the float. BGFV will not drop below 40% SI until shorts start covering.
- Let’s compare that. There’s literally only 1 stock on the market with a higher SI than BGFV from what I can gather. CRXT. Or does it have a higher SI? CRXT is calculated with a float of 1.7m and 779k shorts. But wait, CRXT’s outstanding shares are 21m. So the total SI is actually 3.6%!
- See how floats vs outstanding matters? If we apply the same float metrics as many other stocks, where we exclude insiders and long institutions, we get a float of 8.822m, or a 102% SI. You’ll notice some of these numbers different from previous post, floats are always changing.
- Lets take Worst case scenario though. BGFV has a 40% SI. Making it the “2nd” most shorted stock on the market.
- This sub is littered with “HIGH SI!!!” Plays. But why don’t they all moon?
- Some stocks are shorted for a reason. Take SDC. Is it a good short squeeze play? Eh, yes’ish. The problem is though, the actual company is losing money, high debt, and a drop in sales last quarter. The romance is gone baby. Will SDC become a greater play if it improves sales/earnings/debt position? Yes. But I also saw a day where they returned something like 13m shorts in one day! Shorts are making out good with SDC.
- BGFV is the opposite of SDC. Growing sales, this year will be the busiest EVER, up 138mil on the year.
- BGFV is cash flushed!
- NO DEBT!
- PE ratio is half the industry standard. Meaning, if we held BGFV to the same standards on valuations as the rest its peers, we would end up with BGFV being priced at $60… MINIMUM!
- 5 new institutional buyers, also first time owners of BGFV
- What makes BGFV the real deal?
- So we have a company that is making cash hand over fist, best sales ever, best profits ever, fastest growth ever, and highly undervalued. That is just the part that got me looking at BGFV. But somehow it got better.
- BGFV management hates shorts. Actually if you look at BGFV’s history and the way they went public, it was all in the interest of employees and their shareholder value.
- You may be asking yourselves, why short the company in the first place? The pandemic might have been the best thing to happen to BGFV, and all sporting goods stores. Subtract the ammo, and we have a population that is more than ever excited to go outside. To enjoy family time. Get back to watching sports, work on their physical selves. These are all things BGFV. We also have come to the realization that people don’t want to shop online for their outdoors purchases. BGFV is doing better than ever.
- Who’s stuck in the past? Who thinks every brick and mortar store is going under? SHORTS. Those stupid F…never mind. We all saw GME. That was shorts betting against brick and mortar.
- I also believe that shorts were expecting “Ok, BGFV w/e, you gained 100% in a year, so go ahead and do what every other stock has done this last two years, issue more shares to “continue to grow.” LOL, with no debt, tons of cash, and growing? BGFV laughed.
- Remember that bit about BGFV being all for shareholder value? In April they went to burn the shorts by issuing a special dividend. It worked, at 20% SI BGFV went from $19 to $38. We‘ll get back to this later.
- BGFV did it again, they issued another $1 dividend on top of the 25cent dividend. But they also sent the shorts a message, “we are not diluting.” BGFV purchased back 100k shares and set aside 13m to continue buying back shares. Heck that may have been our movement today.
So we have the company mentioned above, with literally the best short squeeze stats since GME, that also has the company pushing back against the shorts, and issuing a $1 special divvy.
Why does the dividend matter?
Shorts have to pay this dividend to the broker out of their own accounts. You may say, ”it’s just a dollar.” But remember all shorts are traded in margin accounts. Brokers don’t ask for them to come up with the cash. If they don’t have the cash sitting in that account, the brokers will try to deduct it and when there isn’t enough to cover up to $9mil in dividends, they start the margin call. So shorts need the cash. Even if they do come up with it, they are still short on a growing company with no way out. Better to cover than continue bleeding and paying out special dividends every time the company flushed with cash decides to poke you.
Historical evidence?
In May BGFV announced a special dividend and BGFV stock went on a 100% run over the next 19 days. And that was with only 20% SI. It had 3 drops in there. With the next day ripping.
What happened today?
Obviously no covering. There was only a few million buys leading up the the peak today. Even if every single one of those was a short covering, BGFV would still have a 30% SI. I hope that puts it into perspective.
Nov 3
Nov 4
I don’t love Ortex, but we can get a good idea of the returned and borrowed shares. Now, know that borrowed shares don’t translate into short shares, they could be holding on to them.
We can see the maximum amount of shares returned were 600k since the announcement. With 8.4 million shares still shorted and underwater, we have barely scratched the surface. We all know what a short attack stop loss hunt looks like by now. I still remember the infamous one from GME when we hit $340 the second time. That hurt, and hurt bad. Today looked eerily similar. When BGFV got comfy over $40, that‘s when we saw a massive drop. But we found our floor again, we are back at square one, with the same if not more SI.
Today was awesome. People took profits, shorts added fuel, and we ended up in good position with comparatively low buying pressure and MASSIVE selling pressure. Stop loss hunting is very easy on shorted stocks, because most retail is scared coming into a stock they know nothing about except “squeeze.” Which is why I did not put any stop losses on. I know where this is headed, and you cannot shake me from it.
If DFV can become a millionaire, then followed by dropping into the low 100ks and never sell, I think I can take a few days of shorts squirming in a stock that is actually more fundamentally sound than GME ever was prior to Januray 2020.
I am taking a break from Reddit, and only coming back when I see the actual squeeze happening, and alert anyone I can. Not to get in, but to be ready to take your profits. I will be setting a stop loss once BGFV passes $60. I’m confident in that number, but it may take all the way to November 19th to get there. After that I’ll see if it continues to rise, and may sell higher if I choose.
Good luck to you all, only risk what you can afford, and don’t be afraid to take profits. I want every single one of you to have financial freedom. Even sweeter, if that financial freedom comes from the very ones trying to keep us down.
Matthew 6:25-34
This article was written by u/Lawlpaper
