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AMC: equity raises and value traps

Summary:
Usually, you’d go to the cinema to experience drama. But, at the moment, you’re arguably better off just watching the stock of stricken cinema chain AMC Entertainment.After a meteoric rise this year propelled by retail investors, on Tuesday the company sold 8.5m shares at .12 to Mudrick Capital Management, raising a touch under 1m in the process. The stock, as it had done most of the year, went up. Then Mudrick turned around and proceeded to sell its entire position, reportedly telling its clients it was “overvalued” (you don’t say). Stock went up again. By Wednesday’s close, it was up another 96 per cent to .55. Taking it firmly into the 30-bagger territory so far this year. So AMC has done the only rational thing for a theatre chain trading at 10 times

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Usually, you’d go to the cinema to experience drama. But, at the moment,...

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