AMC’s Cost to Borrow Has Hedge Funds Burning Money

By Frank Nez
March 23, 2023
27
AMC Cost to borrow
Market News: AMC’s cost to borrow increases

AMC’s cost to borrow continues to rise.

In the past, we’ve seen how important this data has been regarding major price runup.

Not only does a high cost to borrow incentivize short sellers to close their positions, but it gets AMC one step closer to a squeezing.

In this article I’m going to break down the number figures and explain why the CTB and other data is pointing AMC in the right direction.

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Cost To Borrow explained

The cost to borrow is the average annualized percent (%) of interest on loans hedge funds have to pay.

For example:

AMC has approximately 197.22 million shares on loan as of the publication of this article.

Hedge funds are paying 215% annually on these loans.

This translates to approximately $424 million per year, or $35 million per month.

In the meantime, it’s costing retail investors $0 to hold their positions in AMC stock.

Hedge funds will continue to pay more as AMC’s cost to borrow rises.

Free Live Daily Updates: AMC Short Interest + more

Short interest

AMC short interest

AMC’s current short interest is: 24.36%.

This is the percent of a company’s free float that is shorted.

AMC is a short squeeze play because of this number figure.

This number figures tells retail investors that there is a high interest in shorting the company stock.

It’s this data that allowed retail investors to foresee big price moves in January and in June of 2021.

This same data tells investors today that AMC has the potential to hit another all-time high.

Some of you might be familiar with the correlations between short interest and rise to $72 per share last year.

AMC’s short interest dropped from 22% to 20%, then to 14% when it ultimately skyrocketed in price from $14 per share to $72 per share.

Despite what mainstream media has said in the past, no, AMC’s short interest is not too low to squeeze shorts from their positions.

Related: 93% of AMC Shareholders Say They’re Holding This Year

Will AMC’s cost to borrow force shorts to close?

AMC short squeeze
AMC cost to borrow – AMC short squeeze

Hedge funds may be incentivized to close their short positions in AMC stock as the cost to borrow increases. At some point, it’s not worth paying that high of a fee to continue shorting a company that has fundamentally improved.

AMC is no longer the same endangered company it once was during the pandemic.

The company has improved every quarter since 2021 and has managed to get rid of a lot of debt.

The world’s largest movie theatre continues to innovate and adapt to the changing world.

While online streaming threatened the industry, revenue from box office hits has proved people are still going to the movie theatres, despite the convenience of watching movies at home.

Short sellers are betting against a recovering and innovating film industry generating billions in revenue now.

As AMC continues to prove itself fundamentally and the cost to borrow rises, expect short sellers to begin closing their short positions.

Here is where patient investors will see massive returns.

BREAKING: AMC Entertainment Gets $1bn Boost in Titles from Apple

Do you own AMC stock?

Are you an AMC shareholder or are thinking about buying AMC stock?

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Frank Nez

Frank Nez is an American entrepreneur, journalist, writer, and investor. Frank's work has been cited by SEC and Congressional reports. Franknez.com is a personal finance and market news blog, dedicated to publishing content on money, investing, entrepreneurship, and retail investor news.

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27 Comments

  1. Olivia,

    I am with you. I don’t have near as many shares, but I am seeking to get more soon as I believe, as you stated, the shorts are fkt and soon, like this coming month of March 2023.

    1. Hey Olivia, aren’t you pissed off that you’ll soon have only 567 and 831 shares respectively?

  3. I think the entire APE issue with massive shares available was orchestrated to provide an out for the short bag holders.

    I know you disagree with me but Adam Aaron is a creature of Wallstreet. He came in, likely saved AMC from bankruptcy and found a way to provide enough shares to aggressive short sellers to escape despite their predatory actions. Retail investors are of no consequence to him and successfully driving the price down has enhanced the probability of AMC being acquired. Whomever the buyer is, the acquisition makes a lot more sense at $5.00 than $50.00

    I think you will see an acquisition announced shortly after the March meeting and the acquirer will get controlling interest for $5.00 or less from the massive new number of shareholders (APE convertors) who made a killing buying APE for less than $1.00 or even today’s prices. Our 4,000,000 retail owners of AMC will own less than a majority post conversion and controlling interest won’t require the purchase of our shares.

  4. Been holding and buying for 2 years now, im up to 18,925 shares of amc and 18,000 ape , my amc average cost is 8.85 at the moment, im still buying every chance I can, when I can afford it.

  5. I buy more as I can afford them. I started in 2020 with 300 shares now have 800 AMC and 718 APE. My target is 1000 of each.

  6. Holding for the little guys over here. 2 years and all I’ve done is yawn, ill see yall at the end. Great article!

  7. Hedge Funds have been bleeding 20 million dollars per month for over a year. Call me crazy but what stops them from bleeding another year…..or 2?

    I’ve been holding 2,000+ shares for over a year. I’m more worried about the reverse split.

  11. Frank,
    I think your math (or mine) is off. Let’s take 190 million shares, multiply that by the stock price, then multiply that by the interest rate. 190,000,000 * $13 a share. Comes out to almost $2.5 billion. Now put a 15.55% interest rate on that amount and you have a yearly cost of $384 million, a monthly cost of $32 million or a daily cost of over $1 million. Unless I’m doing something wrong.

  12. 11217 held with 26 year end contracts at values of .50 to 2.00. Been holding a couple hundred prior to 2021, as soon as I learned about dfv I plowed all I could round up in amc

  13. I started picking up shares in March. I am up to 365 shares in one account with a $19.46 average. Another account I have 10 shares with a $12.55 average. I pick up a few every time I have some extra cash. I have loved getting into this!

  14. 4K shares since Feb ‘21 reporting in from Chicago, USA. Thank you Frank Nez for the honest reporting; it’s refreshing to see. My conviction remains 🍿

  17. I have been an AMC shareholder since April of 2021. Bought shares on the dip many times. Will hold . I’m extremely confident that the squeeze is imminent. Not a question of if it happens. It’s going to happen. Do what’s best for you Ape 🦍 community.
    Carpe Diem

  19. Just an average joe with little to no knowledge of stock markets. However, I have 450 shares of AMC from personal disposable income and very happy to join “ape” culture of holding and waiting this one out while hedge funds bleed

    1. Like I said above at least your in and part of the family. IF you can buy when you can even its 1 share

    1. If more than 100 percent of available shares are owned and the Hedgies are borrowing ghost shares and dark pooling them, how can I purchase shares today and be sure that I own actual shares? Maybe a dumb question but I want to pull the trigger and buy a few shares to hold to the end and no almost nothing about stock trading. Any help appreciated

      1. Doesnt matter whether they are real shares or synthetic shares. The hedge funds and market makers that sold them to you low, will have to buy all of them back, real or synthetic, when amc squeezes. Rest assured in this play.

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