AMC Entertainment (NYSE:AMC), operates movie theater chains and is a meme stock. AMC’s stock dropped 3.7%.
Jim Chanos Bought AMC APE Stock
According to Chanos, who spoke to CNBC, he bought the AMC preferred (BOIN:APE) and shorted the AMC ordinary shares against it. APE stock increased by 21%.
The two securities are identical functionally, according to Chanos. If the discount keeps making it freely convertible, sooner or later, “I would assume the Apes will be putting pressure on Mr. Aron,” Chanos added. “That spread represents an economic arbitrage.”
According to Chanos, he started shorting AMC’s common shares again on Monday after being short the company last year. The short seller made his remarks after trading in new AMC Preferred Equity (APE) shares started on Monday. After the market closed on Friday, AMC shareholders received a share dividend in the form of one unit of APE.
The APE shares stand at a par value of $0.01, but their valuation gets complicated by the chance they will be converted into AMC common shares, which in turn results in significant AMC stock dilution. In order to raise more money, AMC may possibly issue more APE shares.
Short interest for AMC is 18.5%.
The stock split effect as APE began trading caused Wedbush analyst Alicia Reese to cut her price objective for AMC from $4 to $2 earlier on Tuesday.
Additionally, Chanos revealed in the TV interview that he is short Zoom Video (NASDAQ:ZM). Shares of Zoom (ZM) fell 15% after the communications software provider posted second-quarter results that fell short of expectations and gave ambiguous guidance.
Chanos is raising a real estate investment trust listed in the US that will take short positions. He has built a reputation on predicting the demise of energy giant Enron two decades ago.
Featured Image: Megapixl @ColleenMichaels
Author Jowi Kwasu 
