Harbor Custom Development (NASDAQ:HCDI) stock is up 10% today on speculation that the home builder is being targeted in short squeeze.
HCDI stock has been among the top short squeeze opportunities on Fintel’s list for several weeks now and has grown a following on social media.
Today, shares are up more than 10% after the CEO said the company has a plan to leverage demand in the multifamily housing market. There is no other news from the company that would move its stock higher or lower. Year to date, shares are up 32%.
What Happened With HCDI Stock
In a statement, Washington-based Harbor Custom said that it plans to build 640 apartment units in the Puget Sound region over the next two years. The planned properties are in various stages of the permitting and entitlement process and the company says construction on the units should be completed in 2024. This latest development follows Harbor Custom’s recently announced plan to build six residential apartment buildings in the Puget Sound region at a total cost of $278 million.
“As a small public company, we are taking advantage of unprecedented values in apartment projects, especially in Western Washington, where the prices are escalating at significant percentages and the cap rates are the lowest I’ve seen in my career,” said Harbor Custom CEO Sterling Griffin. “The objective is to jump on the opportunity by bringing as many units up for re-sale as we can, and in doing so provide some much-needed housing.”
Why It Matters
Harbor Custom is a relatively small, regional home builder. News of its latest building projects, while positive, would be unlikely to move its stock price significantly higher in what is otherwise a down market. In business since 2014, the company operates exclusively in the western U.S. Its areas of business focus include land acquisition and the construction of residential projects ranging from condominiums to single-family homes. With mortgage rates in America marching higher, one would assume it would be acting as a drag on HCDI stock. But the opposite appears to be happening.
There is growing speculation that HCDI stock is being targeted in a short squeeze. Currently about 24% of the float is being sold short, meaning investors are betting the price will decline. Retail investors might be targeting the stock in an effort to force a short squeeze and get the price to rise dramatically. Over the past 52 weeks, Harbor Custom’s share price has swung from a low of $1.67 to a high of $3.80. The stock is currently near its yearly high.
What’s Next for Harbor Custom
In the last month, HCDI stock is up 69% while the benchmark S&P 500 index has fallen nearly 10%. Such a dramatic run higher in such a short period of time is certainly eye opening and would suggest that Harbor Custom’s stock is caught in a squeeze.
As always with these situations, investors should proceed with caution, keeping in mind that what goes up quickly can also crash back to earth just as fast.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
