Hedge Funds Are Now Paying High Fee to Short AMC
Hedge funds are now paying a ridiculously high fee to short AMC Entertainment (NYSE:AMC) stock.
Stonk-O-Tracker is reporting AMC’s short borrow fee rate as high as 1,053% on Wednesday.
At the same time, Ortex is reporting a live max cost to borrow rate of 1.02K.
The movie theatre chain ranked #2 with the highest borrow rate in the entire market last week according to Companies Market Cap which lists more than 7,600 companies.
The cost to borrow, per Ortex, is the annualized percent of interest on loans, typically borrowed by brokers and hedge funds.
This borrow fee is often seen as an indicator that it’s becoming difficult for hedge funds to borrow the stock of a company which may also incentivize short sellers to close their positions; especially in a losing play.
“As the broader stock market has been on a tear for about a month, things are looking grim for investors with big short positions in stocks like AMC Entertainment Holdings Inc. and GameStop,” said Ihor Dusaniwsky, head of predictive analytics at financial technology and analytics firm S3 Partners.
“One factor that is also killing profits for short sellers is the borrowing costs on stocks that no one is willing to part with,” says S3 Partners.
Short sellers paid $1.91 billion in short borrow fees during the first quarter of 2023.
AMC stock is up nearly 10% this year-to-date.
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AMC Short Squeeze Metrics Begin to Rise
AMC Entertainment’s (NYSE:AMC) short squeeze score has now jumped to 96 according to Ortex data.
‘Short Score’ uses a multi-factor model that incorporates multiple short-related metrics, with a higher score indicating that the stock is heavily-shorted and has other characteristics that increase the possibility of a short squeeze occurring.
AMC’s short squeeze score has been between 93 and 94 all year.
Last week it went up to 95.
Now AMC’s short squeeze score has jumped to 96, an indication that a short squeeze probability continues to grow.
AMC’s current short interest is sitting at 28.03% which is much higher than the short interest the company had in 2021 when shares exploded between $6 -$9 per share to its all-time high of $72 per share.
The analytics firm has also listed the world’s largest movie theatre chain on its top 10 list of most likely ‘short squeeze candidates’.
In terms of short borrow fee rate, AMC’s fee has surged passed 1,000% in both April and July this year.
Think AMC Entertainment stock is on the brink of a short squeeze? Leave your thoughts in the comment section of the blog down below.
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