Broadway Financial Corporation (NASDAQ: BYFC) is up over 300% from what seems to be an enormous Black Lives Matter rally. Google (NASDAQ: GOOGL), Facebook (NASDAQ: FB), Netflix (NASDAQ: NFLX), Twitter (NASDAQ: TW), Apple (NASDAQ: AAPL), and Amazon (NASDAQ: AMZN) injected a combined total of $1.1billion into black-run businesses. Hence why every investor under the sun is investing in wholly-owned African American businesses. However, investors are wondering whether BYFC’s explosive growth is here to stay?
Table of contents 1. Why is Broadway Financial up? 2. Who is Broadway Financial? 3. Is it too late to invest in BYFC?
Why is BYFC up?
Broadway experienced a modest 30% increase over this week. However, this week’s growth is almost ant-sized compared to the 200% explosion at the bell this morning.
BYFC began rising after the company said in its filing on Tuesday “that activist investors Commerce Home Mortgage, LLC intended to nominate a director to Broadway’s board at the annual meeting”. However, the nomination is rendered invalid as Commerce was not a shareholder of BYFC on the 1st of May.
However, Broadway Financial is currently experiencing a hostile takeover, from former CEO Steven Sugramn, which is causing many eyes to lock onto the stock. A hostile takeover is when one company acquires another company against the existing management’s will.
Sugarman resigned from CEO back in 2017. However, after leaving Surgman instantly founded the “The Capital Corporation, and acquired lender Commerce Home Mortgage. Sugarman, through his subsidiaries, owns 9.66% of BYFC, making him the largest shareholder. Then on the 13th April, Capital Coprs attempted to buy out the bank. BYFC rejected the offer. However, ever since the rejection Sugarman’s interest to take over the company has only grown.
Thus, it seems BYFC is experiencing backing from the African American community to support the management against Sugarman. Because if the stock rises, it decreases the chance that Steven Surgman can takeover the company. Ultimately causing Surgman to sell his position, relinquish his takeover efforts.
Who is Broadway Financial Corporation?
BYFC is a historically black savings and loan holding company. However, when the corporation went public, it was no longer called “black-owned.” Because anyone could purchase shares in the company. Nonetheless, Broadway’s underlying mission is to “serve the real estate, financial, and business needs of customers in underserved urban communities.”
Is it too last to invest in BYFC?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Short answer: Yes, but understand the risks first (opinion not advice)
Many investors are wondering is it too late to board the BYFC train. Especially as the window of opportunity for African American stocks like Urban One (NASDAQ: UONE), and Carver Bancorp (NASDAQ: CARV) is slowly closing. (opinion not advice)
Riding the BYFC wave
There is extreme investor backing behind Broadway Financial. The stock is already up 350% in a day (at the time of writing). Robinhood and Webull investors are calling it the “Black stock to Buy”. Investors all know that when Robinhood and Webull investors rally behind a stock it usually goes to the moon before crashing in spectacular fashion (opinion not advice).
Don’t disregard the risks
Despite the alluring nature of Broadway’s astronomical growth we must assess the risks. Because here at YIG, we believe every investor should have a balanced perspective on speculative stocks. The overarching risk is a sell-off could occur at any given moment.
For example, we saw a small sell-off (20%) occur between 10:50am – 11:45am. Leaving investors who got in towards 11am already suffering a loss. Thus, to mitigate the risk of a being caught in a possible dump, I would set an exit point. Anywhere between 10-20% is usually a reasonable profit target. However, you might want to increase this range considering the extreme bullish activity (opinion not advice).
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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Written by Patrick McLoughlin, Senior Manager of YIG.