For the past year and a half or so, market participants have been watching the meme stonk madness show unfold, consisting of legions of individual investors and traders coordinating efforts through platforms like Reddit to try and trigger short squeezes. Basically, theses groups are looking for stocks with high short interest and flooding the tape with buy orders in order to send prices upward. When this happens, we’ve seen sudden and rapid moves up as institutional short sellers like hedge funds get caught in unfavorable positions and have to quickly buy to cover their shorts. Along with GameStop (NYSE: GME), the original meme name, AMC Entertainment (NYSE: AMC) has been a favorite stock of the Reddit army.
Let’s take a closer look at the institutional ownership of AMC and see if we can glean anything there. According to the latest Morningstar reporting, the top five institutions that own AMC share are (as of June 30, 2022): 1. Vanguard with 9.17% of shares, 2. State Street with 2.59%, 3. D.E. Shaw with 2.25%, 4. Geode Capital Management with 1.30%, and 5. Northern Trust with 1.10% of shares. So we’ve got an index fund behemoth with the largest stake, an ETF provider, a couple hedge funds like quantitative investment firms, and a wealth management firm.
One interesting observation is that there are no activist investment firms with a 5% or larger stake that would require SEC reporting, so it appears that AMC won’t have to deal with activist investors firing off letters to the board with suggestions on how to “unlock value” and demanding board seats in the near future. The only institution with a stake bigger than 5% is Vanguard, whose bread and butter is passive index funds. State Street is a pioneer in the ETF space, so their stake is most likely a passive one as well.
The D.E. Shaw piece looks at first glance to be a derivative of the retail investor action, since the firm specializes in quantitative trading models based on momentum and price movements. You have to wonder if AMC would even be on Shaw’s radar if it wasn’t for the Redditors causing rapid movements in the stock. It appears that the hedge fund universe is wary of getting involved heavily in meme stocks after Melvin Capital got, well, “Melvin-ed.”
With few large block shareholders outside of a passive index fund custodian, AMC looks to be one of the few stocks where individual investors control the momentum and price direction. For this particular name, we might be to the point where investors can get better intelligence from Reddit than Bloomberg or CNBC. It’s a brave new world out there.
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