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Cliff Asness' Hedge Fund Is Short Selling AMC Stock - And They’re Daring ‘Apes’ To Take Them On

Hedge fund manager Cliff Asness of AQR Capital Management has revealed a short position on AMC. He claims that “meme stock maniacs” won’t do anything significant in response.

AMC Entertainment  (AMC) - Get AMC Entertainment Holdings Inc. Class A Report stockholders and short-selling hedge funds are on a collision course. Skeptical that retail investors can withstand bear market pressures, hedge funds have been betting against meme stocks in an attempt to capitalize on the fatigue of meme stock fanatics.

Figure 1: Cliff Asness' Hedge Fund Is Short Selling AMC Stock - And They’re Daring ‘Apes’ To Take Them On

Figure 1: Cliff Asness' Hedge Fund Is Short Selling AMC Stock - And They’re Daring ‘Apes’ To Take Them On

(Read more from Wall Street Memes: GME: Directors' Performance-Based Compensation Came in Stock Awards, Not Cash) 

Cliff Asness' Hedge Fund Is Teasing AMC Shareholders

Recently, during an interview with CNBC, hedge fund manager Clifford Asness of AQR Capital Management revealed short positions in AMC stock. According to Asness, his reasons for betting against AMC include the company’s valuation, business fundamentals, and the behavioral characteristics of its stock. He summarized his bearishness quite succinctly:

"[AMC stock is] super expensive, super unprofitable, super high beta, and volatil[e]."

However, according to Asness, the fund’s short position in AMC comprises a very small portion of its overall portfolio: just 12 basis points.

When asked about the risks of betting against a stock strongly supported by retail investors, Asness quipped "I dare all the meme stock maniacs to try to hurt us."

AQR Capital Management has about $145 billion in assets under management and manages several funds via various strategies.

Are Shorts Playing With Fire?

AQR Capital Management is not the only group that’s bearish on AMC. Indeed, there are several other hedge funds that are more aggressively shorting AMC stock.

The latest short interest data on AMC, available from Morningstar, indicates an increase in shorted shares. At the end of April, 100.63 million shares were being shorted. But by the end of May, that number had grown to 109.83 million shares. This means that just over 21% of the total float is shorted.

This increase in short interest is, interestingly, coinciding with AMC’s strongest business performance since the beginning of the pandemic.

According to Wedbush analyst Alicia Reese, recent box office successes and ratings near pre-pandemic levels are indications that AMC's business is progressing: "As an industry play, it doesn't seem like it's a great time to short," Reese said.

But short sellers still seem to smell blood in the water. Many are highly skeptical of retail investors’ ability to maintain their resilience in the face of steep losses and a bear market. According to Goldman Sachs, retail investors have liquidated most of the meme stock purchases they’ve made over the past two years.

And it does seem - as pointed out by Randy Frederick from Schwab Center - that many retail investors are sitting on the sidelines after losing money over the past few months.

That being said, AMC’s float is still owned mostly by retail investors. The vast majority of those investors entered their positions with the intent of beating short-sellers through short squeezes - for most, business fundamentals were a secondary motivator, at best.

If history is any guide, it’s a risky proposition to make any definitive conclusions about the fatigue of retail investors, especially meme stock investors. Their resilience has been shocking the markets since early 2021.

AMC shares continue to enjoy strong social media engagement, and even amidst all the macro turmoil in stocks this year, AMC shares have seen some significant recent rallies. The most notable of these occurred in March after the announcement that AMC was acquiring part of gold and silver mining company Hycroft Mining (HYMC).

There may yet be similar catalysts in store for AMC. Hedge fund shorts seem confident in their current position, but a surprise rally in AMC’s share price could cause their bets to backfire.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)