Last Tuesday they placed $US230 million of stock with Mudrick Capital, a distressed debt and “event-driven” investor. Last month AMC’s controlling shareholder, China’s Dalian Wanda, claimed it had doubled its original investment when it sold almost all its AMC shareholding at $US14 a share, cashing out $US1.5 billion.ĪMC’s board and management have also recognised the unique opportunity presented by a horde of investors unconcerned about the company’s fundamentals and the uncertainty over the future of theatres in a post-pandemic, streaming world. AMC’s debt was reduced significantly by the transaction and Silver Lake made a tidy profit from an investment that looked doomed late last year.
So has Wall Street.Īs the retail shareholder invasion of the register got underway, a private equity firm, Silver Lake Investment Partners, switched a $US600 million convertible bond position into equity and sold that stake for $US713 million. They’ve embraced them and taken advantage of them. The key factor that differentiates AMC from GameStop, however, isn’t to do with the short sellers (although it might impact them) but with the way AMC’s management has responded to the Reddit crowd’s invasion of their register. There’s also enormous liquidity in the market for AMC shares – last week nearly 800 million shares changed hands in a single day – which ought to enable short sellers to cover their positions if they want to close them out. They might have a tight squeeze on the short-sellers but, equally, they have to keep buying AMC shares and at least maintain, indefinitely, a price that even AMC believes is unsupported by any fundamentals to avoid a crash that would wipe them out.
While there might some naked shorts, the disclosed short position appears to have hovered around 20 per cent of AMC’s capital, or just below. The short-sellers in AMC have nothing like the positions hedge funds held in GameStop. It’s illegal in most jurisdictions, including the US, albeit difficult to police.
If the first eight months of this ordeal have taught us anything, it is that there might not be an end to this battle in the immediate future.In a “naked” short sale, the shares aren’t borrowed (to avoid the fee), which is akin to increasing the company’s capital base without the company or its shareholders knowing or approving the increase. Gensler made it a point to avoid commenting on any specific scenario or company, but his words do seem to indicate his friendly position towards investors who remain bullish on Gamestop in their plight against the hedge funds with short positions.
#REDDIT SHORT SQUEEZE FREE#
That’s, that’s sort of, that’s not only free speech but it’s part of what makes our capital markets robust that people can disagree and disagree using the medium of the day.”
But I think that people come into your, your show and they advocate either to buy or sell a security before we had television, people did it on radio and now we have various social media platforms. Gensler explained, “I’m not going to speak to one specific company or issuer and so forth. While the conversation about the Gamestop ordeal was only a short portion of Cramer’s overall interview with Gensler, the SEC Chair made a point to stick up for the collection of retail investors that have spent months in a battle with hedge funds that placed bets against the future value of the video game retailer.Ĭramer grilled Gensler about what limits should be set against individual retail investors working as a group via social media. When asked by Cramer if packs of investors on social media should be allowed to target specific positions, particularly funds in extreme short positions, Gensler chose to defend the retail investor. CNBC’s Jim Cramer has been beating the drum against retail investors in the battle of Gamestop and was joined for an interview by SEC Chairman Gary Gensler, the nation’s top dog in regards to financial rule enforcement. Much like at the start of the ordeal, traditional finance media outlets continue to ruffle their own feathers about the outlandishness of a social media community working together against established funds. In what has become the finance sector’s drama that won’t die, the Gamestop (GME) stock saga has endured into its ninth month.
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