Shares in ‘memestock’ favourite AMC Entertainment Holdings (NYSE:AMC) Inc were on the rise on Thursday morning in New York following reports London hedge fund manager Crispin Odey has taken a short position against the firm.
According to an FT report, Odey Asset Management recently bet against the firm through portfolios run by fellow fund manager James Hanbury following a torrid month for AMC that has seen the group’s stock declined by nearly 39%.
READ: Cineworld and AMC recovery hopes lifted as UK box office rebounds
AMC, which narrowly avoided bankruptcy in January as the pandemic left its business of life support, has seen its shares soar during 2021 as retail traders, included members of the Reddit forum r/wallstreetbets, piled into the stock in a bid to ‘squeeze’ short positions and inflict huge losses on hedge funds.
The intervention from retail stock buyers has seen a remarkable turnaround in the group’s shares, which so far this year is up around 1,418%.
However, the share price inflation has left many in the financial sector concluding that the stock is overvalued in relation to the core business, attracting the attention of short sellers who are willing to risk short-term pain in return for what they consider to be a large payoff down the line once retail interest wanes.
Signs of another potential rally were starting to emerge in early deals on Wall Street as the stock rose 1% to US$30.14.