Summary
- The 'apes' of AMC, the retails buyers of Hertz and the short squeezers of GameStop will go down in history no matter what happens next.
- Past success isn't guarantee of future success and significant losses can be incurred for both bulls and bears, so trade carefully.
- Short interest as reflected in Ortex Data is about as accurate as it gets.
- Options is the best way to play AMC and reduce your risk.
- Avoid emotional attachment to AMC since that's your worse enemy whether you are a bear, an ape or a bull.
It's whacko world out there on YouTube and misinformation has given rise to predatory information being fed to amateur investors of [[AMC]]. I have seen screenshots of people putting all their retirement into this stock following so-called advisors on YouTube (whose only goal is to get as many views as possible to make money off from paid views partnerships with Google). As such, they are incentivized to use clickbait titles of conspiracy and "proof" of Citadel employees talking off the books to get you to click on their videos. Though AMC still has significant upside potential - 'apes' have to continue to be smarter than hedge funds or otherwise they risk turning from apes into pigs. You know the saying: "Bulls make money, bears make money, and pigs get slaughtered."
For those of you who don't know my background, I was one of the first retail activist investors who at the time created the largest consortium of retail traders on now-defunct Synergy Pharmaceuticals. A company that went down as management kept destroying the company and shorts kept piling into it and preventing the company from issuing more shares at reasonable prices. Our hope was to force a sale of the company by combining our shares as a retail group and voting against the dilution of the company while at the same time targeting the shorts of the company. The company was offered a decent offer for the whole company by Bausch Health (BHC) but management instead decided to auction the company in a bankruptcy process that wiped out shareholders completely and rendered the shares worthless.
A few months before the bankruptcy momentum was in our favor as we were able to vote against all the directors of the company and also to block an increase in the shares outstanding. Our movement gained analyst traction and was featured in Bloomberg. As shareholders, we were beyond proud of being the first retail activist group with a collective power of around 35 million shares. When we defeated the proposals of the company and the company announced a strategic review with investment bankers the shares surged. However, it was our early success that started to make us emotionally attached to the stock and blind to the fact that the underlying business was still crumbling and losing money. Instead of reducing exposure, many double or tripled down putting all or most of their retirement there only to receive the miserable amount of one penny per share out of the bankruptcy proceedings.
Because we ultimately failed, I am beyond happy that the 'ape movement' has been able to succeed and shareholders on AMC, GameStop, and Hertz have been able to recoup their investments and expose the corruption that's prevalent on Wall Street. However, let's separate facts from fiction but before that, I will give good news to the Apes and that's that AMC can indeed go much higher.
Tip 1: Ignore False Short Interest Talk
The founding members of the Reddit community found that GameStop had 150% of its float shorted because it was readily available information. As such, for every 1 share that actually existed, there were 1.5 out there that were borrowed "fake" shares. There was systemic corruption from brokerages because in theory that should have never happened because you need to deliver those borrowed shares within a week to the rightful borrower. Naked shorting was probably happening the moment that the short interest went past the 50% mark on GameStop.
Stocks in cash accounts can't be lent so every time that you see short interest climb past 50% on any given stock chances are that brokers are failing to deliver those shares and naked shorting is happening. My point is that the short data out there is mostly accurate and that's what allowed Wall Street Bets to exploit the exposure that Hedge Funds had acquired by engaging in corrupt practices and by predatory shorting of companies. If it was easy to hide the real short interest, GameStop shorts would have done so to prevent the public from knowing they were short 150% of the float. Such was the exposure on GameStop that if Robinhood and all other brokers had not intervened and blocked all buying trades in January we could have easily seen GameStop going past $1,500 with the rush of short covering happening because losses to the upside are unlimited and shorts saw their accounts wiped out in literally hours.
However, AMC shorts have already covered a significant portion of their exposure and short interest sits at or around 13% of the float so don't expect the same violence and speed of upward movement here.
Tip 2: Short Interest can remain the same as old shorts exit and new shorts enter without causing a panic short squeeze.
When a short position doubles or triples it will force most shorts to completely cover. Brokers have very little patience with losses as seen on the Bill Hwang debacle. For example, I would never short AMC at the current prices but if it would triple in price I would probably take a sizable position against the company. My shares shorted would then be counted as shares shorted in the short interest count and perhaps the person I sold the shares short was a short who was being squeezed and decided to cover. The net effect of me entering a short position and a short covering the same amount of shares would equate to a zero change in the short interest. However, apes could be claiming a squeeze from $10 when in reality my average entry price would be around $150. When the price of a stock gets very expensive new shorts enter the market and when a price of a good company gets very cheap bulls scoop up those shares and new bulls make their way into the market. That's what a market is. When there are 200 million shares trading every day it means there are tons of apes selling, there are tons of apes buying, and there are tons of new short sellers entering and tons of short-sellers covering.
Tip 3: Apes come in all sizes, shapes, and forms.
It has been impressive to see how resilient apes have been and how much they work as a family but don't expect all 4 million of them to have the same goals, price targets, and ambition. Some will sell at 50, some at 60, some at 70, some at $100, or perhaps if the stock price starts going down some apes won't be able to afford losses in their portfolio and they will sell if the pain starts to arrive. Don't expect otherIt's whacko world out there on YouTube and misinformation has given rise to predatory information being fed to amateur investors of [[AMC]]. I have seen screenshots of people putting all their retirement into this stock following so-called advisors on YouTube (whose only goal is to get as many views as possible to make money off from paid views partnerships with Google). As such, they are incentivized to use clickbait titles of conspiracy and "proof" of Citadel employees talking off the books to get you to click on their videos. Though AMC still has significant upside potential - 'apes' have to continue to be smarter than hedge funds or otherwise they risk turning from apes into pigs. You know the saying: "Bulls make money, bears make money, and pigs get slaughtered."
For those of you who don't know my background, I was one of the first retail activist investors who at the time created the largest consortium of retail traders on now-defunct Synergy Pharmaceuticals. A company that went down as management kept destroying the company and shorts kept piling into it and preventing the company from issuing more shares at reasonable prices. Our hope was to force a sale of the company by combining our shares as a retail group and voting against the dilution of the company while at the same time targeting the shorts of the company. The company was offered a decent offer for the whole company by Bausch Health (BHC) but management instead decided to auction the company in a bankruptcy process that wiped out shareholders completely and rendered the shares worthless.
A few months before the bankruptcy momentum was in our favor as we were able to vote against all the directors of the company and also to block an increase in the shares outstanding. Our movement gained analyst traction and was featured in Bloomberg. As shareholders, we were beyond proud of being the first retail activist group with a collective power of around 35 million shares. When we defeated the proposals of the company and the company announced a strategic review with investment bankers the shares surged. However, it was our early success that started to make us emotionally attached to the stock and blind to the fact that the underlying business was still crumbling and losing money. Instead of reducing exposure, many double or tripled down putting all or most of their retirement there only to receive the miserable amount of one penny per share out of the bankruptcy proceedings.
Because we ultimately failed, I am beyond happy that the 'ape movement' has been able to succeed and shareholders on AMC, GameStop, and Hertz have been able to recoup their investments and expose the corruption that's prevalent on Wall Street. However, let's separate facts from fiction but before that, I will give good news to the Apes and that's that AMC can indeed go much higher.
Tip 4: Past Success is not a guarantee of future success.
I lost my entire portfolio of 270k in Synergy Pharmaceuticals because I put the benefit of an entire group of wonderful people ahead of what was best for me and my family. I was unable to purchase a new home because I went down with the boat. I have had great investment acumen and I managed to turn 40k into 270k by doing big positions in one stock and options. However, that 600% return in a period of 3 years quickly came to an end with one big loss. Diversify and diversify even more and your capital will always be safe.
Tip 5: Dismiss Naysayers of the Future of Movie Theaters. AMC can come back much stronger, just be realistic of what that means.
The CEO of AMC has capitalized on the current rally by selling much-needed stock and as he has repeatedly mentioned in interviews he can use that cash to acquire other movie theater companies as well as some of the best gross selling assets on the market. AMC could be a much bigger and powerful player as he swallows up smaller competitors and puts to good use the cash that stockholders have put in their pockets.
TIP 6: AMC will probably never trade above $110 so have realistic expectations of when to buy and when to sell.
When AMC was trading at $5 it was easy to squeeze the shorts because the market cap was very small and it takes only a couple hundred million dollars to put them in trouble. As the market cap starts to get bigger it requires billions in fresh capital to move the price of the shares. As the market cap approaches $50 billion expect a ton of institutional investors to engage on a new wave of short selling and Apes being maxed out by having put every single penny on their name on the stock already unable to keep pushing the stock much higher. Then it becomes a battle of wills. Institutional investors and hedge funds usually have a 2-10 years horizon for investments. And if their position goes against them at those elevated prices they will double down and triple down until they take the price down. Will apes be able to hold the line for multiple years at elevated prices? The answer is no.
Summary
The stock market is mostly a self-fulfilling prophecy so if bulls take control and the company has shares to issue at elevated prices it can use that needed capital dilution to reinvent itself and survive storms. Shorts on the other hand mostly profit by destroying shareholder value, suffocating companies, and taking away their ability to issue shares at reasonable prices to weather storms at a very high risk of unlimited losses for them but they are an essential force in the market. Honest short-sellers serve a purpose in the market and that's to expose fraud and corruption in management teams. Since the risk of losses is very high for them they tend to be extremely aggressive in their practices and their behavior and many times they engage in illegal activities but they aren't all the same. However, on the other side of short-sellers, it's the pump and dump scheme. Where investors are telling you to buy everything you can with one hand and they are unloading their shares with the other. I am afraid that when people on YouTube are telling you that AMC is going to $1,500 they are willingly engaging in fraud and they are as fraudulent as the shorts who are trying to take away your money by destroying companies. They are both evil and you should block them because they have no idea what they are talking about. Don't put everything on AMC, in fact, don't put more than 10% of your portfolio on a basket of meme stocks. We are all playing musical chairs in here and we are having fun but make no mistake that this is pure gambling. Business fundamentals don't matter until they do. Sell out of the money puts if you believe in the AMC turnaround and give yourself some downside protection while collecting some sizable premiums. Best of luck to all the Apes and keep fighting for justice in the market across a variety of sectors and stocks. Apes won't sell just because you don't. When there's a fire in the jungle, all apes run for the forest. Work as a family of Apes because you have accomplished much together and you have saved a wonderful company with a wonderful CEO which I personally like a lot but don't put your own family at risk and your retirement in jeopardy. In other words,avoid emotional attachment as that will make you a better investor and trader in the future.
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