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AMC Entertainment (NYSE:AMC), the erstwhile distressed movie theater chain that has seen a dramatic reversal in fortunes amid a mind-boggling retail-driven stock price rally, continues to inflict crippling damage on its detractors.
Against this backdrop, the hedge fund Odey Asset Management has emerged as one of the most prominent casualties in recent times as AMC Entertainment shares maintain their inexorable upward trajectory.
As a refresher, the London-based hedge fund had reported a substantial short position in AMC Entertainment back in August. Before this disclosure, the fund had made a killing on its bearish bet as AMC stock price collapsed from $57 to $37 in July.
However, the tables seem to have turned on Hanbury Odey, who manages the firm’s LF Brook Absolute Return fund and currently oversees around $1.5 billion in assets. As an illustration, AMC Entertainment shares have now breached the $50 price level and are up around 70 percent since Hanbury Odey disclosed his bearish bet on AMC.
So, how much loss has Odey Asset Management suffered? Well, Hanbury had previously stated that his short position in AMC was one of his biggest winners, thereby providing a hefty contribution to the LF Brook Fund’s 3.7 percent return as of early August. However, with AMC having reversed almost all of its losses in July, the fund now stands to lose its star performer.
Of course, Odey Asset Management is not the first high-profile casualty of the ongoing retail-driven mania in meme stocks such as GameStop and AMC Entertainment. Back in January 2021, Melvin Capital was forced to seek a bailout after its short position in GameStop blew up.
We had noted in a post yesterday that, as per the tabulation by S3 Partners, GameStop short-sellers lost another $100 million in August, bringing their cumulative losses to around $6.5 billion. Should the current rally in AMC Entertainment shares continue, its detractors are likely to face a similar fate.
With AMC Entertainment and GameStop both inextricably linked via the ongoing retail-driven mania, the two companies are now mulling a formal partnership. To wit, Liz Claman at Fox Biz has now tweeted that the CEO of AMC Entertainment, Adam Aron, has reached out to GameStop for a possible tie-up:
BREAKING: $AMC @CEOAdam Aron to @ClamanCountdown: We have made contact with $GME @GameStop on a partnership, we're not ready to say what it is." says AMC now playing offense to get folks back to the theatres w/epic $25m ad spend
— Liz Claman (@LizClaman) September 8, 2021
While the exact nature of this partnership is as yet uncertain, we had speculated yesterday that the tie-up might involve GameStop’s recent push into the arena of Non-Fungible Tokens (NFTs). GameStop has now activated a dedicated website for NFTs that references players, creators, and collectors, thereby indicating an incoming ecosystem to cater to the gaming community. A fantastic way for GameStop and AMC Entertainment to collaborate would be for the theater chain to integrate with GameStop’s upcoming NFT platform, allowing complete interoperability and transferability. For instance, theatergoers should be allowed to redeem their tickets for NFTs on GameStop’s platform and vice versa. This approach would not only create additional demand for GameStop’s NFT platform but also allow AMC Entertainment to tap into this growing phenomenon, netting a win-win formula in the process.