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Speaking on CNBC’s Halftime Report on Tuesday, hedge fund manager and famed short-seller Jim Chanos said he has taken an arbitrage trade on AMC Entertainment (NYSE:AMC), buying the new APE preferred shares and shorting AMC common stock.
Chanos said he believes they “should be the same price, or roughly the same price.”
The founder of Kynikos Associates said he is “counting on them to close,” and he thinks “ultimately they’ll all be the same class.”
AMC stock fell on Monday after the APE units began trading after being issued as a special dividend in a nod to retail investors. The preferred shares have the same voting rights as AMC common stock.
Despite the similarities, AMC trades at a premium to the preferred shares, although the gap is closing with AMC common stock trading at $9.52 and the APE preferred shares at $7.26 at the time of writing.
“Functionally, the two securities are the same. And I’d guess the apes will be putting pressure on Mr. Aron, if the discount continues, to make it freely convertable sooner rather than later,” Chanos told CNBC.
Chanos also questioned the decision by AMC CEO Adam Aron to take on debt to make acquisitions before the pandemic, stating he has put “out a lot of fires here, but a lot of the fires he helped set.”
