AMC insiders gutted huge chunks of their shares after WTF Spike, AMC sold shares and Wanda was already out
But who is buying? CEO Adam Aron schmoozing and bamboozling the Reddit crowd.
By Wolf Richter for WOLF STREET.
There has been a paradigm shift: For now, it wouldn’t be a big deal for AMC Entertainment, which lost $ 4.6 billion in 2020, if Americans didn’t go back to cinema like they used to – I mean, why them, with the big screens and fancy sound systems and the cheap popcorn they have at home and the limitless choices they have through their streaming services? That wouldn’t be a big deal, as AMC is now selling its own stock and riding the meme-stock mad train.
As CEO Adam Aron schmoozing and bamboozling the Reddit crowd, insiders and executives are throwing their actions hand in hand.
AMC board member Gary Locke is the king of share sales in terms of how much of his stake he gave up on Thursday: 63.7% of his holdings, according to the SEC filing on June 4. He earned an average of $ 49.82. per share for the 34,293 shares he sold, making $ 1.71 million.
And the Reddit crowd swallowed them up. In Wednesday’s first four hours of trading, AMC’s shares had more than doubled to briefly $ 72.62, which was apparently a unique and compelling opportunity for executives and directors to get rid of their shares. A few months ago, AMC shares were at $ 2.
AMC finished after hours Friday at $ 43.72. So Locke had timed his sale very well.
Locke knew what he was doing. The former governor of Washington state served as ambassador to China from 2011 to 2014, during which time Dalian Wanda Group, a Chinese conglomerate, bought a controlling stake in AMC. And Locke became Wanda’s man at AMC in 2016. But he’s running for reelection next month, and with Wanda out of sight – he had sold almost his entire stake earlier this year – he is probably absent.
Carla Chavarria, senior vice president and head of human resources, gave up 47.7% of her stake on Thursday, selling 40,346 shares for an average price of – yes, wow, drum roll, superb timing – $ 62.67 l ‘stock, according to the SEC filing Friday, walked away with $ 2.53 million.
Another star is John McDonald, executive vice president of US operations. On Thursday, he sold 30,000 shares for an average price of $ 56.59 (for $ 1.70 million), after selling 50,000 shares on April 22 at an average price of $ 9.92 (for $ 496,000 ) and after offering 7,500 other shares. In total, since April 22, it has dropped 48.3% of its stake.
You can see some of the SEC’s insider data right here on WOLF STREET by clicking on the ticker symbol [AMC] and scrolling down the page until you come to 13-F repositories and insider trading (this works for all stocks discussed here).
Together, the nine officers and directors have sold nearly $ 10 million in shares since mid-April; they sold 293,000 shares, or 31.6% of their combined holdings.
John McDonald has three sales on this list and Daniel Ellis has two. The “% of stake sold” reflects these sales compared to their stakes before April 16. If your smartphone intersects the seven column table, keep your device in the landscape position:
|Date of sale||shares sold||$ in sales||$ per share||% of stake sold|
|03 / June||Elizabeth furst frank||Executive Vice President, Content||21,462||934 455||43.54||18.9%|
|03 / June||Carla Chavarria||Senior Vice President, HR||40 346||2,528,548||62.67||47.7%|
|03 / June||Gary Locke||Director||34,293||1,708,553||49.82||63.7%|
|03 / June||John mcdonald||Executive Vice President, US Operations||30,000||1,697,700||56.59||48.3%|
|03 / June||Daniel Ellis||SVP, Development, Internat’l||13 766||681 659||49.52||26.0%|
|03 / June||Anthony Saïch||Director||10,330||604,305||58.50||23.8%|
|01 / June||Stephane Colanero||Executive Vice President, Marketing||15,000||411,306||27.42||13.8%|
|May 21st||John mcdonald||Executive Vice President, US Operations||7,500||gift|
|14 / May||Kathleen pawlus||Director||14,495||201 046||13.87||30.5%|
|22 / Apr.||John mcdonald||Executive Vice President, US Operations||50,000||496,000||9.92|
|16 / Apr.||Sean goodman||Executive Vice President, Chief Financial Officer||45,404||430,793||9.49||22.5%|
|16 / Apr.||Daniel Ellis||SVP, Development, Internat’l||10,000||94 830||9.48|
CEO Adam Aron is not on this list. He serially swore that he didn’t sell his stock, which the Reddit crowd ate. He has not discussed whether he uses hedging strategies, such as swaps, to protect his gains. He plays the Reddit crowd for all it’s worth, hanging out with them, teasing them, joking with them.
The biggest seller of all has been the Dalian Wanda Group. The wonderful crazy train that began to gain momentum earlier this year took AMC shares to double digits from low to single digits after the company pitched the idea at the end of the year. last year that she might have to file for bankruptcy, and Wanda was already playing with the corollary that she would end up holding a big empty bag.
But as the action spiked from January, Wanda began unloading her stake in massive piles to the Reddit crowd. And it’s outside.
AMC itself has also sold shares in waves, recently at huge prices, making more than $ 2.2 billion, seven share offers since last summer. The latest came on Thursday, after AMC’s stock price climbed to $ 72 on Wednesday. While the officers and directors were busy selling their shares, AMC also sold shares. It looks horrible.
I can imagine that on Thursday in the Zoomified C suite, no work was done beyond selling stocks and jubilation.
When the share offering was announced after the executive had discharged its shares, the shares began to plunge. The offer included one of the toughest and biggest CYA warnings of all time: do not buy our new shares “unless you are prepared” to lose “all or a substantial part of your investment. “. AMC ended up selling $ 587 million in new shares. And he plans to sell a lot more.
Sales of shares dilute existing shareholders. But who cares ? Dilution only matters for earnings per share, and that earnings per share represented a massive loss of $ 39.15 per share in 2020, and given the stress in which the brick-and-mortar theater industry was and will be in the future, diluting these shareholders mathematically means reducing “losses per share”.
However it looks, the reality is that the $ 2.2 billion raised from these share sales will allow AMC to keep spending money, limping and paying its creditors a little longer. When AMC ran out of money to pay its creditors – a fate she envisioned last fall as she discussed a possible bankruptcy filing – that’s when the deal would be opened. to shareholders.
But that won’t happen until CEO Aron can trick and bamboozle the Reddit crowd into buying their stocks at these crazy prices while insiders unload. No movie theater required. Just hand out free popcorn and sell the shares.
Since Wednesday’s WTF moment, stocks have plunged 39% to $ 43.72 on Friday after-hours, but they are still well above what they started on Wednesday morning, showing just how this stuff is crazy (data via Investing.com):
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