AMC Entertainment (NYSE:AMC) has been the talk of the town after Delaware’s Chancery Court ruled to lift the status quo order on the company, opening the path for a reverse stock split and an increase of authorized shares. Together, these two actions will allow for a conversion of AMC Preferred Equity (NYSE:APE) into AMC stock, which will provide the movie theater chain with much-needed equity capital. At the same time, AMC shareholders will be harmed by the dilutive effects of the conversion. Following the court ruling, AMC declined by more than 30%.
The reverse split and increase in authorized shares will become effective as of Aug. 24. AMC expects that APE will cease trading the next day and be delisted from the New York Stock Exchange. In addition, AMC reported that there were 995.4 million units of APE outstanding as of June 30, which would mean that 99.54 million shares of AMC would be issued upon the conversion on a post-reverse split basis.
The conversion is exactly what CEO Adam Aron wanted. After the court decision, Aron posted a letter celebrating the success, explaining that AMC would emerge as a stronger and more efficient company.
5 Investors Betting Big on AMC Stock
Tracking institutional ownership is important, as these large investors provide liquidity and support for stocks. During Q2, 232 13F filers disclosed a stake in AMC, a decline of 21 filers from the prior quarter. None of these filers own AMC in their top 10 positions. Still, the total number of shares owned by these filers increased to 143.75 million from 135.34 million.
Meanwhile, the institutional put/call ratio sits at a high 3.02, up from 2.48. That’s equivalent to 357.38 million puts and 118.32 million calls, implying a bearish options stance. With that in mind, let’s take a look at AMC’s largest shareholders as of the second quarter:
- Vanguard: 50.39 million shares. Vanguard sold off 626,040 shares during Q2.
- BlackRock (NYSE:BLK): 20.56 million shares. BlackRock sold off 94,862 shares during Q2.
- State Street (NYSE:STT): 7.97 million shares. State Street acquired 129,721 shares during Q2.
- Jane Street Group: 6.07 million shares. Jane Street acquired 5.83 million shares during Q2.
- Charles Schwab Investment Management: 3.51 million shares. Charles Schwab acquired 15,805 shares during Q2.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
