CM stay safe man.
Thanks for all you have done for FREEDOM.
I knew there was a reason I woke at 3AM.
PLEDGE?
as in OATH?
Remember your oath.
Remember why you joined.
It's about the person standing next to you.
Q
stopped over a year ago. never missed it.
Love me some STONKS
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AMC Bet by Hedge Fund Unravels Thanks to Meme-Stock Traders – Update
BY Dow Jones & Company, Inc.
— 6:13 PM ET 06/11/2021
A multipronged bet on AMC Entertainment Holdings Inc. ( AMC
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) boomeranged this month on Mudrick Capital Management LP, the latest hedge fund to fall victim to swarming day traders.
Mudrick's flagship fund lost about 10% in just a few days as a jump in AMC's stock price unexpectedly triggered changes in the value of derivatives the fund held as part of a complex trading strategy, people familiar with the matter said.
The setback comes months after a group of traders organizing on social media helped send the price of GameStop Corp. ( GME
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) and other stocks soaring in January, well beyond many investors' views of underlying fundamentals.
The development prompted many hedge funds to slash their exposure to meme stocks. Mudrick Capital's losses highlight how risky retaining significant exposure to such companies can be – even backfiring on a hedge-fund manager who was mostly in sync with the bullishness of individual investors.
Jason Mudrick, the firm's founder, had been trading AMC stock, options and bonds for months, surfing a surge of enthusiasm for the theater chain among individual investors. But he also sold call options, derivative contracts meant to hedge the fund's exposure to AMC should the stock price founder. Those derivative contracts, which gave its buyers the right to buy AMC stock from Mudrick at roughly $40 in the future, ballooned into liabilities when a resurgence of Reddit-fueled buying recently pushed AMC's stock to new records, the people said.
As part of the broader AMC strategy, executives at Mudrick Capital were in talks with AMC to buy additional shares from the company in late May. On June 1, AMC disclosed that Mudrick Capital had agreed to buy $230.5 million of new stock directly from the company at $27.12 apiece, a premium over where it was then trading.
Mudrick immediately sold the stock at a profit, a quick flip that was reported by Bloomberg News and that sparked backlash on social media.
"Mudrick didn't stab AMC in the back…They shot themselves in the foot, " read one post on Reddit's Wall Street Bets forum on June 1. Other posts around that time referenced Mudrick as "losers," "scum bags" and "a large waving pile of s – t with no future." Members of the forum urged each other to buy and hold.
Inside Mudrick, executives were growing apprehensive as the AMC rally gained steam. The firm's risk committee met on the evening of June 1 after the stock closed at $32 and decided to exit all debt and derivative positions the following day.
It was a day too late.
AMC's stock price blew past $40 in a matter of hours June 2, hitting an intraday high of $72.62. Call option prices soared amid a frenzy of trading that Mudrick Capital contributed to and, by the end of the week, the winning trade had turned into a bust, costing the fund hundreds of millions of dollars in losses.