Skip to content

Famed short seller Jim Chanos opens a short position in AMC

Famed short seller Jim Chanos opens a short position in AMC
Dino Kurbegovic

It seems that the meme stock mania is not letting up, with new power players and developments hitting the markets almost daily. 

As a result, the famed short seller Jim Chanos revealed a fresh position in the newly released AMC Preferred Equity Units (NYSE: APE) as part of an arbitrage play. 

Chanos joined CNBC’s Fast money halftime report on August 23, where he announced that he opened up a position in APE but is short the AMC Entertainment Holdings (NYSE: AMC) shares, claiming that they have the same economic value and should be trading at the same price. 

“We actually just initiated an AMC short. We were short last year, then covered. We just initiated a new position yesterday; however, calm down apes, I’m actually an AMC security holder on the other side. We actually bought the new APE preferred, and we shorted the AMC common against it. They’re economically the same security. They’re not freely convertible to each other, but they’re economically the same security.”    

What it all means

AMC declared a special dividend for holders of AMC stock in the form of the APE shares, issued to all common stockholders, which started trading on August 22

Chanos is looking to exploit the difference between share prices as AMC is at $9.56 and APE at $7.02 at the time of writing, the first dropping by 4% and the second rising over 20%. 

The founder of Kynikos Associates said he is “counting on them to close”, meaning that AMC shares will cease to exist, and he thinks “ultimately they’ll all be the same class.” 

Moreover, down the line, shareholders may vote for the shares to be convertible for one another, meaning that Chanos’s economically similar argument will hold true, and the shares will become one class, trading at the same price. 

At the time of writing, this arbitrage play brought money for Chanos, at least on paper, but only time will tell what the future will hold for the meme stock and Chanos bet.  

Buy stocks now with Interactive Brokers – the most advanced investment platform


Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.  

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finbold.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD

Read Next:

Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts

Sign Up

or

By submitting my information, I agree to the Privacy Policy and Terms of Service.

Already have an account? Sign In

Disclaimer: The information on this website is for general informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. This site does not make any financial promotions, and all content is strictly informational. By using this site, you agree to our full disclaimer and terms of use. For more information, please read our complete Global Disclaimer.