Hunter Maritime Acquisition Corp. HUNT is the latest and one of the most extreme examples of the powerful combination of low float and high trading volume.
Hunter Maritime shares were trading higher by a staggering 916 percent this week before being halted Wednesday morning pending an information request by Nasdaq. The company said Nasdaq is requesting additional information related to the stock's trading activity.
With no major news out from the former maritime shipping company, it’s likely market dynamics that are fueling the incredible rally. The stock was halted four different times Tuesday on a circuit breaker.
What Happened
Hunter Maritime is one of a number of low float stocks that have experienced major short-term rallies on little or no news in recent quarters. When shares start to rise, a flood of momentum traders coupled with a limited float can lead to parabolic spikes in share price.
The only bit of recent news from the company happened March 21 when the company announced is completed a merger with NCF Wealth Holdings Limited and will be changing its name to NCF Wealth Holdings Limited and pivoting its business to financial technology in China.
In the press release, NCF CEO Jia Sheng said the company is “excited to become a public company to further enhance its brand image and ability to serve its clients and counterparties.”
Hunter Maritime shares initially traded slightly lower last Friday following the announcement.
Why It's Important
It’s not obvious that the merger deal creates any immediate value for Hunter Maritime investors, so it’s likely the move has been mostly technical in nature.
According to shortsqueeze.com, Hunter Maritime only has 300 shares held short for a short percent of float of essentially zero. Those numbers suggest a short squeeze is likely not the culprit behind the large move.
The stock’s 205,200-share float is minuscule, however, and a huge jump in trading volume this week explains the extreme volatility. On Tuesday, Hunter Maritime’s trading volume was 714,451 shares compared to its long-term average daily trading volume of just 58,471 shares.
At time of publication, Hunter Maritime was halted at $95 per share after closing last week at $18.10.
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