Mudrick Capital Management, the hedge fund managed by Jason Mudrick, made a quick profit from the return of the stock trading frenzy after quickly buying and selling a stake in the movie series AMC Entertainment.
AMC announced on Tuesday it raised $ 230.5 million by selling 8.5 million new shares to Mudrick at just over $ 27 a share, saying it plans to play a “crime” by using the proceeds to buy smaller movie theaters chains that have suffered during the pandemic.
Before the day ended, Mudrick sold the entire position, according to a person familiar with the fund’s trading.
The exact profit size could not be known, but AMC shares responded enthusiastically to the fundraising news, jumping to $ 33.53 in Tuesday morning trade, up more than 28 percent from Friday’s close.
Modric Capital Management declined to comment on the deal. AMC Entertainment did not immediately respond to a request for comment.
AMC shares More than doubled Last week echoed the frenzied trading by retail investors in January, when the company was one of many “meme stocks” – most notably GameStop – that it defended on social media aspects such as the Reddit discussion forum. R / WallStreetBets.
The person familiar with the deal said that Mudrick had always intended to sell stocks quickly, realizing that the company had appreciated in value after a recent return to trading fueled by Reddit.
By mid-noon in New York, AMC’s share price was down to $ 31.40, still up nearly 20 percent on the day.
Tuesday’s surprise winnings were not the first time Mudrick had taken advantage of an AMC stock bet. It loaned the company $ 100 million last year when the cinemas closing threatened it bankruptcy, and took the shares as a fee for the loan. And the Earlier this year, The existing AMC bonds were exchanged for new shares and those quickly sold off. Together, the sales of the two shares generated a net profit of $ 200 million for the fund.
Jason Modric, a troubled specialist, founded the company in 2009 and now manages $ 3 billion in assets. Mudrick’s Distopped Opportunities Fund returned 11.3 percent to investors last year, net of fees, according to a report by HSBC.
Private equity firm Silver Lake Partners has also benefited from sudden increases in AMC’s share price this year for retail investors. In January, it exercised its $ 600 million bond swap for AMC stocks with a gain of $ 113 million.
In May, Dalian Wanda, the long-time controlling shareholder of AMC, sold all of its nearly 7 percent stake at about $ 14 a share.