Harmony Merger Corp (HRMNU): Hedge Fund Sentiment Unchanged

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Harmony Merger Corp (NASDAQ:HRMNU).

Hedge fund interest in Harmony Merger Corp (NASDAQ:HRMNU) was flat at the end of the last quarter. This is usually a negative indicator. At the end of this article, we will also compare Harmony Merger Corp (NASDAQ:HRMNU) to other stocks, including Resource America Inc (NASDAQ:REXI), EVINE Live Inc (NASDAQ:EVLV), and Perion Network Ltd (NASDAQ:PERI) to get a better sense of its popularity.

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With all of this in mind, we’re going to take a look at the new action regarding Harmony Merger Corp (NASDAQ:HRMNU).

What have hedge funds been doing with Harmony Merger Corp (NASDAQ:HRMNU)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, flat over the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Robert Hockett’s Covalent Capital Partners has the number one position in Harmony Merger Corp (NASDAQ:HRMNU), worth close to $8.2 million, accounting for 1.7% of its total 13F portfolio. On Covalent Capital Partners’s heels is Hudson Bay Capital Management, managed by Sander Gerber, which holds a $6.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain John Bader’s Halcyon Asset Management, Douglas Hirsch’s Seneca Capital and John Thiessen’s Vertex One Asset Management.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Harmony Merger Corp (NASDAQ:HRMNU) but similarly valued. We will take a look at Resource America Inc (NASDAQ:REXI), EVINE Live Inc (NASDAQ:EVLV), Perion Network Ltd (NASDAQ:PERI), and ModusLink Global Solutions, Inc. (NASDAQ:MLNK). This group of stocks’ market caps is the closest to Harmony Merger Corp (NASDAQ:HRMNU)’s market cap.

As you can see, these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $26 million in HRMNU’s case. EVINE Live Inc (NASDAQ:EVLV) is the most popular stock in this table. On the other hand, Resource America Inc (NASDAQ:REXI) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Harmony Merger Corp (NASDAQ:HRMNU) is even less popular than Resource America Inc (NASDAQ:REXI). 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.