Retail investors continue to buy and hold their current positions in AMC stock. For the last two years retail investors have been continually buying and holding AMC because they know that the stock is being heavily shorted by hedge funds, and eventually those hedge funds will have to close their short positions. Short sellers have borrowed millions of shares of AMC and are waiting to buy back the shares at a lower price. However the question arises, how long until hedge funds are forced to close these short positions? Although there is no definite answer, AMC Apes know that at some point hedge funds will have to close the short positions to avoid even more detrimental losses — so it is truly only a matter of time.
WHO IS SHORTING AMC STOCK?
Currently there are millions and millions of shares of AMC that hedge funds have borrowed to short the AMC stock. Funds are heavily invested in betting against the movie theater company and therefore are waiting to buy back the shares at a lower price — however AMC Apes do not foresee that lower price to ever happen and continue to HODL. Currently Hedge funds that are shorting the stock include the following:
- Bank of America Corp DE
- Melvin Capital
- Citadel Advisors LLC
- Simplex Trading LLC
- Susquehanna International Group LLP
- 683 Capital Management
- Group One Trading LP
- Millennium Management LLC
- Piction Mahoney Asset Management
- Anchorage Capital group LLC
The short positions remain a problem for hedge funds, as the longer they have the positions open the more exposed they become to financial losses. In fact, hedge fund Melvin Capital has lost millions by keeping their short positions open. In 2021, Gabe Plotkin’s hedge fund Melvin Capital ended the first quarter at a 46% loss from its AMC and GameStop short positions. Melvin Capital was bearish on the meme stocks, but retail investors were absolutely not. Interest rates for short sellers continue to skyrocket which AMC apes believe will eventually only lead all hedge funds to be forced to close the shorts. AMC retail investors continue to buy and hold without any hesitation. They know that it is only a matter of time that they will see the stock short squeeze. CNBC’s Jim Cramer stated, “Anyone shorting AMC or GameStop is out of their mind. Wallstreetbets is too powerful, and trying to bet against them right now is just giving them more ammo”.
HOW CAN RETAIL INVESTORS HELP?
The AMC community has been a strong community for a long time. But it’s important that the community continues to grow and that they continue to educate other investors on the AMC movement. Right now, the best way to help the AMC movement is to continue to buy shares of AMC and to always hold your positions. Always share articles, tweets and youtube videos that discuss the AMC movement and the importance of buying and holding the shares. The key takeaway is that the more investors who buy and hold the stock, the more the hedge funds will continue to lose on their short positions. At some point if they’re losing too much, they will have no other choice but to close the short seller positions and the AMC stock will squeeze.
WHAT IS A SHORT SQUEEZE?
According to Investopedia, in order for a short squeeze to occur, the stock must have an abnormal amount of short selling positions on it. When short sellers begin to close out their short positions, a “short squeeze” occurs — which means that the stock price rapidly increases as the positions are closed. While the pice begins to increase, it naturally draws in attention to new buyers, while other short sellers start to panic and close their positions as well. The combination of the frenzy drives a rapid rise in the stock price, which is then often referred to as the short squeeze.