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Mudrick Capital Management, the hedge fund led by Jason Mudrick, made a quick profit from the return of the meme stock market frenzy after quickly buying and selling a stake in AMC Entertainment.
AMC announced Tuesday that it had raised $ 230.5 million by selling 8.5 million new shares to Mudrick for just over $ 27 per share, and said it planned to play “offense” with revenue from buying movie chains smaller ones who had fought during the pandemic.
By the end of the day, Mudrick had sold the entire position, according to a person familiar with the fund’s trading.
The exact size of the profit could not be known, but AMC shares had responded enthusiastically to fundraising news, reaching $ 33.53 in Tuesday morning trading, up 28% with respect to the closing on Friday.
Mudrick Capital Management declined to comment on the trade. AMC Entertainment did not immediately respond to a request for comment.
AMC shares more than double last week in an echo of the frantic trade carried out by retail investors in January, when the company was one of several “meme stocks” (especially GameStop) defended on social media as the Reddit discussion forum r / WallStreetBets.
Mudrick had always intended to sell the shares quickly, perceiving that the company was overvalued after the recent return of the Reddit-powered trade, said the person familiar with the trade.
By mid-afternoon in New York, the price of AMC shares had dropped to $ 31.40, up about 20% a day.
Tuesday’s adventure wasn’t the first time Mudrick has benefited from a bet on AMC shares. Last year he lent money to the company for $ 100 million when the closure of the cinemas threatened him with bankruptcy and he took action as a commission for the loan. I earlier this year, exchanged existing AMC bonds for new shares and sold them quickly. The two stock sales together made a profit of $ 200 million for the fund.
Jason Mudrick, a distressed specialist, founded the firm in 2009 and now manages about $ 3 billion in assets. According to an HSBC report, Mudrick’s Distressed Opportunity Fund returned 11.3% to investors last year, net of commissions.
Private equity firm Silver Lake Partners has also taken advantage of price increases in AMC shares driven by retail investors. In January, he exercised his right to exchange a $ 600 million bond into AMC shares, which allowed him to make a profit of $ 113 million.
In May, Dalian Wanda, a long-time controlling shareholder of AMC, sold virtually its entire 7% stake to about $ 14 per share.
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