Volume Spike Investor

Comstock Homebuilding Companies Inc. (CHCI) is looking like a crazy micro-cap stock in the crazy homebuilder sector.  This stock doesn’t even fit the bill of any stock screens we run because even after this massive run its market cap is still under $20 million.

Yet Comstock’s stock is up a whopping 150% at $0.927.  Its 52-week trading range is $0.05 to $2.65.  Keep in mind that after this came public in late 2004 or early 2005 that this was north of $20.00 per share during the homebuilder hay-day.

Shares yesterday rose from $0.13 to $0.37 on 2.4 million shares.  Today’s gain as of 1:03 PM EST is actually on over 5 million shares.  The average volume is only about 290,000 shares.  Yesterday it disclosed that via a voluntary and friendly foreclosure that eliminated some $32.7 million in debt.  As of last look this one had $186.94 million in total liabilities.

While this would be bad news in any other market or during any other part of the business cycle, this is being viewed by day traders and swing traders as a further lifeline for the company.  Maybe other home builders should consider the same, or at least ask how the small player was able to pull this off in a positive way.

This is all on a day where the SPDR S&P Homebuilders ETF (AMEX: XHB) is up only 0.3% at $20.37 (52-week range $13.81 to $26.6; over $40.00 in mid-2006).

Jon C. Ogg
September 3, 2008