AMC Entertainment (NYSE:AMC) short sellers paid $1.91 billion in short borrow fees during the first quarter of 2023.
In March, AMC stock was ranked the #1 stock with the highest borrow fee rate according to data from S3 Partners.
AMC’s cost to borrow shot up to 1,000% during the start of the second quarter this year.
“High stock borrow fees can test the conviction level of short sellers as financing costs can take a large bite out of expected Alpha,” S3 analyst Ihor Dusaniwsky said.
Short sellers rely on brokers to have stock shares available to borrow.
If the broker has very few shares of a stock available, then that stock is placed on the hard-to-borrow list, a list AMC Entertainment is currently on.
Stocks on the hard-to-borrow list may not be short-sellable or have higher stock loan fees, hence why we’re seeing AMC’s cost to borrow rise significantly.
S3 Partners estimates AMC short sellers paid a total of $1.91 billion in stock borrow fees in the first quarter of 2023, up from $1.54 billion in the fourth quarter of 2022.
To make matters worse, AMC Entertainment is up nearly 30% this year-to-date which means 2023 has not been a good year for AMC short sellers.
AMC’s Short Borrow Fee Today
Sources such as Ortex and Stonk-O-Tracker are reporting AMC’s short borrow fee near 200% today.
However, Ortex reports AMC’s max cost to borrow at 1.05K%.
The cost to borrow, per Ortex, is the annualized percent of interest on loans, typically borrowed by brokers and hedge funds.
AMC stock is currently hard to borrow which is why brokerage firms have been increasing their short borrow fees.
Investors going long on the movie theatre company have been buying and holding their stock for over two year now in efforts to drive shares up again and squeeze short sellers from their positions.
Today, AMC’s short interest has risen to 26.39% with at least 192 million shares out on loan.
AMC’s short interest was only at 23% when buyers were able to squeeze a percent of short sellers from the play, sending share prices to their all-time high of $72.
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