Fails to deliver in shares of AMC Entertainment Holdings reached extraordinary levels in November. 4.3 million shares have failed to clear by November 14th, the latest data available.
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This new report, out today from the SEC, shows the highest levels of fails to deliver in months. This is particularly striking given the much lower fails to deliver in the largest stocks.
Let’s see how many fails to deliver some of the largest stocks in the market had on November 14th:
Amazon: 253
Apple: 0
Google: 0
Microsoft: 11,553
These companies are hundreds of times larger than AMC. But somehow, a little theater chain dwarfs them all in failed stock trades.
Fails to deliver can happen for benign reasons. But a long and persistent pattern of fails to deliver, as in AMC stock, can point to something more nefarious.
Huge numbers of failed trades can indicate naked short selling. This is the illegal practice of selling short shares you never borrowed.
It’s a potent way to crush a stock’s price. After all, if you don’t have to borrow a stock, you can sell short all you want!
Increasing failed trades may be related to higher borrowing costs for AMC shares. With fees going from 20% to up to 100% a year, borrowing shares is more expensive than ever.
It’s a lot cheaper to naked short sell. Unfortunately, it’s also against the law.
I urge the SEC to investigate the long term pattern of chaos in AMC shares. Only a full investigation can restore confidence in markets.
What do you think of this huge fails to deliver number? Leave a comment at the bottom and let me know!
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