So far this year, shares of AMC Entertainment Holdings, Inc. have increased by a factor of 20:
This runup has badly burned short sellers, largely hedge funds. New data shows just how bad the bleeding is:
The latest data, courtesy of S3 Partners, LLC, reveals that by the end of last week, short-sellers who bet against AMC had lost $4.08 billion over the course of this year. The picture was bleaker for those who had targetted GameStop, with the data revealing that the short sellers’ year-to-date losses stood at $6.44 billion. Cumulatively, this shows that AMC and GameStop short-sellers have lost $10.52 billion as we exit the third quarter.
But hedge funds don’t seem to be learning from their mistakes:
Interestingly, however, while the AMC short interest shares have dropped since June, recent data reveals that they are rising again. For instance, in late August, they stood at roughly 82 million, highlighting that by the end of last week, more than four million short interest shares were added to the bets against the company.
These losses have already caused the implosion of some funds that bet against meme stocks. It’s incredible that fund managers can look at their colleagues losing everything and not change their strategy.
I suspect the problem is their mindset. Institutional investors are used to viewing retail traders as “dumb money.” If I’m so convinced that I’m smarter than my adversary, even clear evidence that my side is losing may not change my mind.
It’s just a shame that the teachers and firefighters whose pensions many hedge funds play the markets with don’t have a say.
More on markets:
New Data: AMC Fails to Deliver Down 85%
Will Evergrande Spark a Global Financial Crisis?
What a Hedge Fund King Fears Most
Photo: “Prescribed Burn Sign” by U.S. Fish and Wildlife Service – Midwest Region is marked with CC PDM 1.0
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