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Bronte Capital: “Business Prospects for AMC are Poor”

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  • AMC

Bronte Capital, an investment management firm, published its “Amalthea Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A return of 8.05% was delivered by the fund for the third quarter of 2021, whereas the globally diversified MSCI ACWI (in AUD) was up 2.84%. for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Bronte Capital, in its Q3 2021 investor letter, mentioned AMC Entertainment Holdings, Inc. (NYSE: AMC) and discussed its stance on the firm. AMC Entertainment Holdings, Inc. is a Leawood, Kansas-based theatrical exhibition company with a $20.9 billion market capitalization. AMC delivered a 1,827.83% return since the beginning of the year, while its 12-month returns are up by 1,120.00%. The stock closed at $40.87 per share on November 12, 2021.

Here is what Bronte Capital has to say about AMC Entertainment Holdings, Inc. in its Q3 2021 investor letter:

"AMC is simply an extreme example of what is probably a non-promoted delusion. It is a highly levered company owning multiplex cinemas. (Full disclosure – we are short a tiny position – about a tenth of a percent of our fund.)

Business prospects for AMC are poor.

Every year large screen televisions and home theatre equipment become cheaper. Every year the attraction of the couch at home versus the multiplex improves. It looked – preCovid – to be a slow burn to bankruptcy.

That is not guaranteed though. Hollywood might come up with a better offer. Or AMC might be saved by some new technology (such as a truly realistic 3D that does not give you headaches).

Post Covid, AMC looks like a fast-track to bankruptcy even after it has raised over a billion dollars from mostly retail investors.

AMC is the subject of a widespread delusion that believes that hedge funds manipulate the stock in “dark pools” and with massive numbers of fake shares. They allege the US Securities Regulators are in cahoots with Citadel (a large market maker) to manipulate the stock. They also believe by ganging up (people power) they can “democratize capitalism” and destroy the dastardly short sellers."

Based on our calculations, AMC Entertainment Holdings, Inc. (NYSE: AMC) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. AMC was in 21 hedge fund portfolios at the end of the first half of 2021, compared to 19 funds in the previous quarter. AMC Entertainment Holdings, Inc. (NYSE: AMC) delivered an 18.77% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.