Tag Archives: APE

Don’t Wanna Pay 216%? How About a Naked Short?

Cost to borrow shares of AMC Entertainment holdings went through the roof today. From a report out just this afternoon on InvestorPlace:


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The cost to borrow (CTB) fee for AMC Entertainment (NYSE:AMC) has skyrocketed to 215.80% today, up by more than 100% from the reading of 101.76% on March 10. Yesterday’s closing CTB fee reading clocked in at 211.41%. Meanwhile, between March 10 and today, AMC stock has fallen more than 10%. What’s going on?

The CTB represents the yearly fee that short sellers must pay to borrow shares. A higher fee could represent increased short seller demand while a lower fee could represent lower demand. A higher fee could also signal a scarcity of available short shares. Still, AMC’s exorbitant CTB fee could actually be seen as a positive for AMC stock shareholders.

Let’s say you want to short AMC. But you don’t want to pay 216% a year interest because…uh…no one does.

But don’t worry! There’s a dandy alternative.

How about a naked short?

With a naked short, you don’t even have to borrow the shares at all! Instead of 216% interest, how about 0%!

Pretty sweet, right?

One small problem. It’s against the law.

There is strong evidence of massive naked shorting in AMC stock. Fails to deliver hit nearly 12 million shares in the latest SEC report.

That’s absolutely staggering, even for AMC. And keep in mind, most stocks have few if any fails to deliver.

Why are tons of trades failing?

To close a short sale, you need to borrow some shares. But it’s kinda hard to do that right now, at 216% interest.

So why not just cut some corners and naked short? It’ll just wind up a fail to deliver and get swept under the rug.

There’s likely a crime here in plain sight. But for it to matter, the SEC needs to act.

But before shorts laugh at the SEC and pop a bottle of Dom, they should think about the risks.

Half of Wall Street is betting that AMC will crash if APE shares convert. This share conversion dilutes AMC stock holders.

But conversion isn’t certain. And even if it happens, AMC shares have jumped after prior dilutions.

In a way, that makes sense.

Yes, you own a smaller piece of the company after dilution. But this heavily indebted company now has far more capital.

That makes the risk of bankruptcy increasingly remote.

I have no idea where AMC or any other stock is going.

But I do know that people don’t like paying 216% interest. And to avoid it, they just might break the law.

After all, what could happen?

Do you think the SEC will act? Leave a comment and let us know!

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More on markets:

AMC Shorts Lose $180 Million So Far This Year

Interest Rate Time Bomb May Kill Hedge Funds

Executives Dumped Shares Shortly Before First Republic Rescue

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AMC Shorts Lose $180 Million So Far This Year

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.


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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

SVB Fallout

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Save Money on Stuff I Use:

Fundrise

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!

Misfits Market

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.