This is not investment advice.
Like moths to a flame, short sellers love to bet against AMC Entertainment Holdings. Those bets have cost them a cool $180 million so far this year.
And it’s only March.
Get the blog before anyone else…subscribe!
From a new report in TheStreet:
This year alone, thanks to quick rallies in the stock, AMC short sellers have already lost about $180 million.
One of the main reasons why there has been such high demand for short positions in AMC in recent months is the fact that many investors have entered into an arbitrage trade. They’ve shorted AMC and gone long APE due to the share price discrepancy.
Short sellers need to borrow AMC shares. The borrow fees have soared to 160% currently, a staggering rate.
AMC and APE are an obvious pairs trade. The two may converge if APE shares convert into AMC shares, as expected.
So if you short AMC and buy APE, you should make money on both trades. The AMC shares decline due to dilution, while the APE shares rise in value to match the AMC shares.
Sounds great right? Small problem…
AMC has a passionate fan base of retail investors. Those investors are attempting to orchestrate a short squeeze.
And that’s a whole lot easier to do when 25% of the shares are sold short and it costs 160% a year to do it.
The pain has no end in sight.
Retail investors are buying stocks like crazy. They bought at a pace of $1.5 billion a day in the first two months of the year, a record.
Hedge funds shorting AMC, pairs trade or no, are making a big mistake.
Every day, more cash is coming in to squeeze them. And you can’t hold a position forever at 160% interest.
Worst of all, their potential for loss is unlimited.
Any responsible investor would close this trade immediately. But never forget, they’re playing with other people’s money.
What do you think the future holds for AMC and APE shares?
Leave a comment and let me know!
More on markets:
Interest Rate Time Bomb May Kill Hedge Funds
Executives Dumped Shares Shortly Before First Republic Rescue
Get the blog before anyone else…subscribe!
If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog!
Save Money on Stuff I Use:
This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.
More on Fundrise in this post.
If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!
I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!
I wrote a detailed review of Misfits here.
Use this link to sign up and you’ll save $15 on your first order.
Tremendous 
One thought on “AMC Shorts Lose $180 Million So Far This Year”