# Harte Hanks (HHS): A 19% Merger Spread, Half Paid in a Preferred That Trades 4,300 Shares a Day > Harte Hanks closed at $4.18 on October 20, 2026, against Star Equity's $5.00 cash-and-preferred takeover. A value investor sees a 19% gross spread, but half the deal is paid in a thinly traded 10% preferred. We check the math, the $15 million financing, the $4.60 rival bid and the risks. By MCAFax · Published October 21, 2026 Section: Markets & Main Street › From Wall Street · Series: Market Calls, Investigated (https://mcafax.com/notebook/series/market-calls-investigated) Canonical: https://mcafax.com/notebook/hhs-harte-hanks-19-percent-merger-spread-half-paid-in-thin-preferred Source: MCAFax, The Broker's Notebook (https://mcafax.com/notebook). MCAFax is not a lender or a law firm. --- Harte Hanks, Inc. (Nasdaq: HHS) closed at $4.18 on October 20, 2026, against a $5.00-a-share takeover by Star Equity Holdings, Inc. (Nasdaq: STRR). Value investor Calvin Blissett says he bought at $4.20 for a "19% gross spread," but half of the deal is paid in a Star preferred stock that traded only about 4,300 shares a day over the last 30 sessions. The S-4 filed October 19 is not yet effective and still points to a fourth-quarter 2026 close. *This is journalism and commentary, not investment advice. We hold no position unless stated.* ## Key facts - **Ticker and exchange:** Harte Hanks, Inc., HHS, Nasdaq. Buyer: Star Equity Holdings (STRR); preferred: STRRP. - **Situation type:** micro-cap merger arbitrage paid in cash and preferred stock. - **The call:** Calvin Blissett (@calvinblissett) posted on October 20, 2026 that he bought HHS at $4.20; the prior close was $4.36. - **Deal terms:** $5.00 cash or 0.50 STRRP preferred per share, with total cash capped at $19.2 million, about half of the $38.4 million equity value (August 14, 2026 release). - **Rival bid:** an unnamed "Party A" raised its all-cash proposal to $4.60 on September 11, 2026 and was still talking as of October 19. - **Preferred liquidity:** STRRP closed at $9.10 on October 20, 2026, against a $10.00 liquidation preference; 2,455,000 shares were outstanding at June 30, 2026. - **Timing:** outside date March 1, 2027; no meeting date set as of October 19, 2026. ## Is HHS a good bet right now? The arithmetic depends on how the preferred is valued. Mr. Blissett's 19% uses the $5.00 headline against $4.20. At STRRP's $9.10 close, the 0.50-share preferred leg is worth about $4.55, so a 50/50 mix is worth about $4.78 a share, a spread of about 14% over $4.18, by our math. That is wide for a signed deal. The deal is small, the buyer needs debt financing, and holders who get preferred may struggle to sell it. ## Why are investors bullish on Harte Hanks? - **A signed deal at a big premium.** The $5.00 price was 119% above the $2.28 close on August 7, 2026, per the [S-4](https://www.sec.gov/Archives/edgar/data/1210708/000149315226047624/forms-4.htm). - **Financing support.** On August 13, 2026, the deal's lender sent Harte Hanks a letter confirming its confidence to provide up to $15 million, the minimum the deal requires. - **A second bidder.** Party A's $4.60 all-cash proposal is 10% above the October 20 close. - **Insider support.** Directors, including 5.7% holder Bradley Radoff, signed voting agreements. - **A 10% coupon.** Star declared $0.50 a share of STRRP dividends in the first half of 2026, per its [Q2 10-Q](https://www.sec.gov/Archives/edgar/data/1210708/000121070826000077/strr-20260630.htm). ## Who's making this call and why? Calvin Blissett is a value investor with about 10,700 followers on X who publishes write-ups on Substack. On October 20 he [laid out](https://x.com/calvinblissett/status/2112627568864362667) the case: the S-4 is filed, the bank letter covers the $15 million needed, the Q4 2026 close was reaffirmed, and Party A sits at $4.60. His summary: "19% gross spread, 76% IRR." The IRR is his estimate and assumes an on-time close. He also named the main risk. Asked about the mix, he [replied](https://x.com/calvinblissett/status/2112630676650619248) that he would buy STRRP from forced sellers, adding: "It may get dumped since the amount being issued is a lot relative to current liquidity and this is a key risk." **Track record.** Calvin Blissett is not yet scored on our [scoreboard](https://mcafax.com/notebook/market-calls-scoreboard). **Other supporters:** we found no other credible X account making a recent case on Harte Hanks. The board's backing and the Party A bid are the main outside support. ## What's the bear case for HHS? - **Preferred overhang.** At a 50/50 split, about 1.9 million new STRRP shares would be issued, about 78% of the shares outstanding at June 30, by our math. Average volume over the last 30 sessions was about 4,300 shares a day, per Yahoo Finance data. - **The preferred has already slipped,** from $10.14 on August 13, 2026, before the deal, to $9.10 on October 20. - **Weak results.** Harte Hanks lost $5.0 million in the second quarter of 2026 on $38.0 million of revenue, versus a $0.3 million loss a year earlier, per its [Q2 10-Q](https://www.sec.gov/Archives/edgar/data/45919/000004591926000005/hrth-20260630.htm). - **Financing condition.** The deal needs at least $15.0 million of financing at closing; a letter of confidence is not funded money. - **Slipping timeline.** The August 14 [release](https://www.sec.gov/Archives/edgar/data/45919/000004591926000009/ex99120260814prtransaction.htm) targeted a close in 60 to 90 days. The S-4 came on day 66 and still needs SEC effectiveness. ## Who disagrees? We found no public bear on X. The skepticism sits in the filings: - **The buyer cut its own price.** Star offered $5.50 on August 3, then lowered it to $5.00, citing about $4.5 million of transaction expenses, a $6 million swing in net debt, weaker second-quarter results and client-loss concerns. - **The $4.60 floor is softer than it looks.** Party A's October 8 draft would cut its cash price dollar for dollar for bank debt repaid at closing, any cash shortfall and excess expenses. - **A large holder is waiting.** A significant stockholder said on September 11 it would not discuss the deal before reviewing the proxy. - **The vote bar.** Approval needs a majority of all outstanding shares, so shares that do not vote count against. ## What are the key facts to verify? - The [S-4](https://www.sec.gov/Archives/edgar/data/1210708/000149315226047624/forms-4.htm) background section for the Star price cut, Party A's bids and the lender letter. - The September 15 [go-shop update](https://www.sec.gov/Archives/edgar/data/45919/000162828026062044/ex99120260915prupdatetrans.htm) on the Exempted Party designations and the $1,152,000 termination fee. ## What would prove it right or wrong? **Right:** the S-4 goes effective, the vote passes, financing funds, and STRRP holds near $9 or better as new shares hit the market, or a higher all-cash bid arrives. **Wrong:** financing slips past March 1, 2027, the vote fails, Harte Hanks loses more clients, or STRRP falls well below $9 as merger holders sell. *This is journalism and commentary, not investment advice. We hold no position unless stated.* ## Questions readers ask **What does Harte Hanks (HHS) do?** Harte Hanks, Inc. (Nasdaq: HHS) is a customer experience outsourcing company offering marketing, sales, customer care, data, fulfillment and logistics services to brands. It had 7,454,240 shares outstanding at June 30, 2026. **What are the terms of the Star Equity deal for Harte Hanks?** Under the August 14, 2026 merger agreement, each Harte Hanks share can elect $5.00 in cash or 0.50 shares of Star Equity's 10% Series A preferred stock (STRRP), which has a $10.00 liquidation preference. Total cash is capped at $19.2 million, about half of the $38.4 million equity value, so elections are prorated. **What is the merger arbitrage call on Harte Hanks?** On October 20, 2026, value investor Calvin Blissett posted that he bought HHS at $4.20, calling it a 19% gross spread with a 76% IRR if the Star Equity deal closes in the fourth quarter of 2026. The IRR is his estimate. **How big is the Harte Hanks merger spread?** Against the $5.00 headline price, $4.20 is a 19% gross spread. Valuing the preferred half at STRRP's $9.10 close on October 20, 2026, a 50/50 mix is worth about $4.78 a share, about 14% above the $4.18 HHS close, by our math. **Who is Party A in the Harte Hanks sale?** Party A is an unnamed bidder described in the October 19, 2026 S-4. It proposed $4.50 a share in cash on September 7, 2026, raised it to $4.60 on September 11, and was still in talks as of October 19. Its October 8 draft would reduce the price for bank debt, cash shortfalls and excess expenses. **Why is the Star Equity preferred stock a risk for Harte Hanks holders?** At a 50/50 split, about 1.9 million new STRRP shares would be issued, about 78% of the 2,455,000 outstanding at June 30, 2026, by our math. STRRP traded only about 4,300 shares a day over the 30 sessions to October 20, so merger holders selling could push the price down. **Is the Star Equity financing for Harte Hanks committed?** The deal requires at least $15.0 million of financing at closing. On August 13, 2026, the lender sent Harte Hanks a letter confirming its confidence to provide up to $15 million, according to the S-4. Closing still depends on the financing conditions being met. **When is the Harte Hanks merger expected to close?** The S-4 filed October 19, 2026 says the deal is expected to close in the fourth quarter of 2026. It still needs SEC effectiveness and a vote of a majority of all outstanding Harte Hanks shares. The outside date is March 1, 2027. **What could go wrong with the Harte Hanks deal?** Risks include financing falling short, a failed shareholder vote, further client losses after a $5.0 million second-quarter loss, and a drop in STRRP's price that lowers the value of the preferred half. Star already cut its offer from $5.50 to $5.00 in August 2026. **Is this article investment advice?** No. This is journalism and commentary, not investment advice. We report what tracked investors are saying and check it against public filings. We hold no position unless stated.