Anchorage Capital Group, LLC has announced it is shutting down due to significant losses.
The hedge fund is closing after 18 years and returning the $7.4 billion dollars it manages back to clients.
Their credit fund, Anchorage Capital Partners is suspending clients’ ability to get their money back, via WSJ.
Hedge fund Citadel Securities is facing a similar issue with their clients, preventing them from withdrawing unless they pay a heavy fee.
Anchorage Capital was one of the top 10 financial institutions shorting AMC stock and now they’re throwing in the towel.
Welcome to Franknez.com – Hedge funds have been warned not to bet against AMC Entertainment or the community. Retail investors are about to shut hedge funds down.
Let’s get started!
Anchorage Capital Had 4 Million Puts of AMC Stock
This hedge fund was betting against AMC in put options.
A put option allows traders to profit from the decline of a stock.
These contracts have an expiration date by which a trade settles if it meets at or below the strike of the bet.
The put buyer’s entire investment can be lost if the stock doesn’t decline below the strike.
This is how hedge funds such as Citadel Securities have lost billions all year.
Retail investors continue to buy and hold AMC stock, meaning short sellers don’t stand a chance against the community supporting the century old theatre chain.
And with AMC Entertainment continuously innovating with crypto, NFTs, and licensing agreements, the company is impenetrable.
The news came shortly after Hong Kong’s $2.8 billion hedge fund Tybourne shut down.
Is this a trend we’re going to continue seeing from hedge funds shorting companies, but more specifically AMC stock?
Without a doubt.
Squeezing Shorts from Their Positions
As retail investors continue to buy and hold AMC stock, they will eventually squeeze shorts from their positions.
The stock has recently come down from the consolidating level ranges of $40 and $30.
Its current share price of $24 seems rather appropriate for hedge funds with overleveraged positions to cover.
That is unless they are willing to lead their customers into the brand-new year with mounting losses again.
AMC is currently oversold and will be making its way back up resulting in further losses for shorts who’ve recently opened new positions.
The company has progressively been paying down its debt every quarter and increasing its revenue throughout the year [read Q3 highlights].
And with an incredibly strong retail community rooting for the company, more hedge funds like Anchorage Capital will begin to realize betting against AMC will result in a massive loss.