Helios and Matheson Analytics Inc (NASDAQ: HMNY) is a stock that has seen some tremendous declines. Even with news that broke early this morning that the company is working hard to get to profitability, investors have lost hope, sending the stock into the red. However, I received an interesting tip from a reader surrounding a potential hostile takeover of the company. At first, I thought the tip was another one of those that wasn’t worth mentioning, but as I dug in, I became a bit more interested. While this is nothing more than a rumor, a hostile takeover may be in the making for the company. Today, we’ll talk about:
- The tip I received;
- The response I received from a party that is rumored to be close to the situation;
- the risks involved in HMNY; and
- what we’ll be watching for ahead.
A Tipster Says HMNY Is Headed For A Hostile Takeover
I received an interesting email from a tipster that asked to remain anonymous. Here’s how the email string went:
I am a UC San Diego student and I came across your article today about HMNY. I actually overheard people from Triton Funds talking about plans to do a hostile takeover of the company. The fund is a student-run investment fund started by students from our school. Might be worth reaching out to them to see what is happening. – Tipster
Thanks, I’ll check it out! Do you have a minute to chat? – Joshua Rodriguez (me)
yea (phone number redacted) – Tipster
When I got on the phone with the tipster, I learned some interesting information, should this story be true. The tipster said that he overheard a conversation between various members of Triton Funds, a firm started by three graduate students from South California. The source said that during the conversation, Nathan Yee, co-founder of Triton was discussing a conversation the firm had with HMNY management. The source went on to inform me that the firm made an offer to acquire Helios and Matheson Analytics, but was turned down. Therefore, Triton management was discussing the possibility of a hostile takeover.
Before we dive in any further here, there are some concerns I have with the tipster:
- While I do have an email address and phone number, the name associated with the email address has changed in the short time that I have been speaking with him. Therefore, the tipster seems to be making extra efforts to remain anonymous.
- The tipster also informed me that he is an investor in HMNY and has lost quite a bit of money as a result. So, he personally has skin in the game should the stock realize gains.
Nonetheless, I decided to dig in a bit further.
I Received A Prompt Response From Nathan Yee
Shortly after ending the conversation with the tipster, I reached out to both Helios and Matheson Analytics and Triton Funds. While HMNY did not immediately respond to my request for a comment, Nathan Yee, co-founder of Triton Funds, did. Here’s how that conversation went:
My name is Joshua Rodriguez. I’m the founder of CNA Finance. I received an anonymous tip suggesting that Triton Funds is interested in a hostile takeover of HMNY. The tipster said that he overheard members of Triton talking about this at UC San Diego. Is there a comment that you can provide?
Mr. Yee responded with the following:
Unfortunately, we are not allowed to comment at this time.
All the best,
TRITON FUNDS LLC
I ended the conversation with a quick thanks:
Thank you Nathan.
I found Mr. Yee’s response to be an interesting one here. If Mr. Yee and the team at Triton Funds hadn’t been considering at least making an offer for Helios and Matheson Analytics, why would they not be “allowed” to comment on the situation? Wouldn’t Mr. Yee be able to simply say something like, “Trident is not interested in making an offer to acquire HMNY at the moment.” or something of that sort? Considering this response, there may be something to the tip.
Consider The Risks
Even with some hostile takeover potential, as far-fetched as it may be, HMNY is still an incredibly risky investment. The company is struggling to pay its bills, and many believe that even with coming increases in subscription pricing and limitations on use of MoviePass, these struggles will continue. In fact, that is my belief as well. At the end of the day, since HMNY acquired a majority stake in MoviePass, things have gone from bad to worse, with dilution at the helm of the company’s survival. Should an investor get involved based on takeover chatter and a takeover not happen, well, that investor is likely to lose his shirt as more dilution and bad moves by management are likely on the horizon.
While I found this story interesting enough to share, it’s important to remember that as of right now, this is nothing more than a rumor based on a conversation that I had with one of my readers. Takeover chatter is one of the most common forms of market manipulation, so if you’re going to move on this, please be sure to do so with caution. Nonetheless, if a hostile takeover is in the making HMNY may actually become a stock worth watching.
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