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AMC: Insiders Capitalizing On Apes’ Hubris

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  • AMC Chairman, President and CEO sold another large position today (December 9th).
  • In the meantime Ape hubris on social media and so called heads of Ape army are continuously hiding the facts and twisting the narratives.
  • Market and company fundamentals are weak but technicals are weaker.
  • Mother Of All Short Squeeze (MOASS)already happened and given the circumstances, probability of happening that again is next to zero.
  • Tradingvolume and price movementsindicate not all retail investors are part of Ape community. Many ofthem are short AMC and I would like to refer them as“Shape” (Short Ape).
New York during the COVID-19 emergency.

Massimo Giachetti/iStock Editorial via Getty Images

One year plot of AMC shows that MOASS happened between May 6th 2021 and June 2nd 2021, when AMC stock went from $9 to $72.76, a whopping ~700% gain which blew any conventional wisdom. Looking deeper into it validates the fact that a perfect storm was brewing and stars were aligned and why things exploded. Short interest went unsustainable triggering short squeeze. There were not enough float available for new entrants to initiate new short position. This hypothesis is already validated by a report published by SEC. Congratulations to those who made it big. It was certainly once in a life time opportunity for many folks.

Taking advantage of this market hubris, AMC raised capital from the market resulting into substantial increase (~5X) in share counts. Combining both share counts and stock price, the total market value has gone up by more than 3,500%. Increasing float impacted a few other metrics that completely changed all technical merits that Apes relied on for another massive short squeeze termed as Mother Of All Short Squeeze (MOASS).

Today short interest is only 17% of the float. It is not even among top 35 shorted companies.

High Short Interest Stocks publishes list of companies whose short interest is more than 20%. As of November 25th there are 35 such companies and obviously AMC is not in the list.

What does cost of borrow tell us?

Cost to borrow has gone down drastically to ~0.7% and currently it is at almost ~1/50th of the highest point during MOASS in June. With total 513 million shares, it is almost impossible to trigger another short squeeze unless short interest goes really high. Interestingly short interest has stayed flat or gone down since the June 2021. Apes theory is that as price goes up shorts would cover and they will increase the price further and it can trigger the chain reaction leading to MOASS. If we look at the actual data, short interest went up slightly when price went up and short covered when price went down, exactly opposite of Ape’s hypothesis.

Not all retail investors are Apes

Another assumption that Apes rely on is that they own the float and they are not selling it no matter what. I agree that retail investors own 70% of the float but not all are Apes. If that would be true, stock price would not go down from $70s to $60s to $50 to $40s to $30s and below, while short interest stayed flat or went down slightly. There are many smart retail investors who do due diligence on both fundamental and technical analysis and take advantage of arbitrage created by Apes. I would like call them as Shape (abbreviation of Short Apes), who are taking opposite position of Apes. There are many such examples in Seeking Alpha community and other social media platform.

Insiders are selling hand over fists

Management is selling at any opportunity legally possible. Adam M Aron, Director, Chairman, President & CEO, on December 07, 2021, sold 312,500 shares in AMC Entertainment Holdings (AMC) for $9,645,938 (as shown in figure below). Apes are defending such move by CEO by saying Aaron is old and he will have to plan for his retirement etc. It should be noted that Aaron has already monetized close to $50 million by selling his stocks. There is no reason to keep selling further if one would believe stock could go even 2X from the current level. Even if someone can buy such baseless argument, how can we justify every other executive selling shares at any given opportunity legally possible.


Apes vs wall street vs Shape

It is not manipulated by hedge funds anymore. It is now being manipulated by so called heads of Ape army. They enjoy the attention, their cult followings and airtime. They are so smart that they don’t even disclose their own holdings. YouTube pumpers have been wrong so far in the last 6 months and keep coming up with a new theory everyday. They completely ignore data, financial disclosures and action of management team. While doing so, Apes are also providing an opportunity to another segment of retail investors who understand the fundamental and technical better. They are not emotionally attached and taking an opposing view of Ape theory and we can call them Shape (Short Ape). Apes are providing an opportunity of lifetime to Shape. Shape are playing smart and winning, whereas Apes are losing the touch and it seems hope & pray are the only strategy left for them.

Analyst's Disclosure: I/we have a beneficial short position in the shares of AMC either through stock ownership, options, or other derivatives.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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