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Do Hedge Funds Love Harmony Merger Corp (HRMN)?

Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30. In this article, we are going to take a look at smart money sentiment towards Harmony Merger Corp (NASDAQ:HRMN).

Harmony Merger Corp (NASDAQ:HRMN) has experienced an increase in support from the world’s most elite money managers of late. At the end of this article, we will also compare Harmony Merger Corp (NASDAQ:HRMN) to other stocks, including magicJack VocalTec Ltd (NASDAQ:CALL), Planet Payment Inc (NASDAQ:PLPM), and RealNetworks Inc (NASDAQ:RNWK) to get a better sense of its popularity.

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To the average investor, there are many gauges that stock market investors have at their disposal to assess their stock investments. Two of the less utilized gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best investment managers can outperform the market by a significant margin (see the details here).

Now, we’re going to review the latest action regarding Harmony Merger Corp (NASDAQ:HRMN).

What does the smart money think about Harmony Merger Corp (NASDAQ:HRMN)?

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 33% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jeffrey Tannenbaum’s Fir Tree has the largest position in Harmony Merger Corp (NASDAQ:HRMN), worth close to $11.7 million, accounting for 0.2% of its total 13F portfolio. The second largest stake is held by Hudson Bay Capital Management, managed by Sander Gerber, which holds a $3.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. John Bader’s Halcyon Asset Management is another fund with a bullish outlook for the stock.

As one would reasonably expect, some big names have jumped into Harmony Merger Corp (NASDAQ:HRMN) headfirst. Robert Hockett’s Covalent Capital Partners initiated a $2,000 position during the quarter, less than 0.1% of its investment portfolio.

Let’s now take a look at the hedge fund activity in other stocks – not necessarily in the same industry as Harmony Merger Corp (NASDAQ:HRMN) but similarly valued. We will take a look at magicJack VocalTec Ltd (NASDAQ:CALL), Planet Payment Inc (NASDAQ:PLPM), RealNetworks Inc (NASDAQ:RNWK), and ESSA Bancorp, Inc. (NASDAQ:ESSA). This group of stocks’ market caps are similar to Harmony Merger Corp (NASDAQ:HRMN)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CALL 9 11341 0
PLPM 10 4986 4
RNWK 8 37260 -3
ESSA 5 8959 1

As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $18 million in Harmony Merger Corp (NASDAQ:HRMN)’s case. Planet Payment Inc (NASDAQ:PLPM) bagged the highest number of hedge fund holdings among these stocks, whereas ESSA Bancorp, Inc. (NASDAQ:ESSA) attracted the least number of hedge funds. Compared to these stocks, Harmony Merger Corp (NASDAQ:HRMN) is even less popular than ESSA Bancorp, Inc. (NASDAQ:ESSA). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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