There is a lot of strange activity in stock of AMC Entertainment Holdings, Inc. Fails to deliver have been huge and persistent.
In such cases, a common culprit is an illegal practice known as naked short selling. This involves selling shares you don’t actually own without ever borrowing them first.
The trade is never completed (or “fails to deliver”) because the shares never existed in the first place. This tactic is a powerful way to drive down a stock’s price.
I’ve written about this issue often (see here and here). But a thought occurred to me: what if I’m just cherry picking data, even unconsciously?
So I decided to run a little experiment.
The latest SEC data for the first half of August includes the following dates, since there is no data on weekends:
I picked a random date within this period using this tool:
August 5th it is!
Then, I took all the SEC data from August 5th and dumped it into a Google Sheet. After a little spreadsheet magic to get it in the right format, I sorted by which stocks had the most fails to deliver.
AMC is in the top 4% of all stocks for fails to deliver on this randomly chosen day. Thousands of stocks are below it. Many are much larger, such as Apple and Facebook.
The pattern of huge numbers of failed trades in AMC has gone on for so long the stock has repeatedly been listed on the NYSE’s Threshold List. This lists problem securities targeted for a cleanup in their failed trades.
AMC has been heavily shorted for most of the year. I suspect hedge funds are doing illegal naked short sales in this stock to drive the price down.
When will the SEC look at its own data and act?
More on AMC:
AMC Fails to Deliver Up 1088% in Latest Data
AMC Has 35,000 Times the Fails-to-Deliver of Amazon
Squeezes in AMC and Others are Killing Off Short Sellers
Note: AMC came in at 229th place out of 5647 stocks in the list, hence the 4% figure (229/5647).
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