GameStop’s a Good Short. AMC? Not So Much.
The tactics that worked so well against hedge funds in the first go-around may not be as effective with the theater chain.
Get shorty?
Photographer: Bloomberg/BloombergEnergized by an epic win over Wall Street’s most feared hedge funds, retail investors are now hunting for the next GameStop Corp. Among the short list of names is AMC Entertainment Holdings. But buyers beware: the movie theater chain has too much debt to make a good short squeeze.
To put the hedge funds in a corner, retail investors need to ensure that there are not too many shares floating around to be borrowed against. But as long as the pandemic continues, both GameStop and AMC have strong incentive to raise money via new equity issues, especially after soaring over 1,600% and 500% respectively in January. That would provide ammunition to the bearish Wall Street pros.