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Markets: Hedge Fund RenTech Loads Up On AMC Stock

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In the "meme stock" era, the two forerunning stocks are GameStop, the electronics retailer, and AMC Entertainment, a movie theater chain. These two stocks have been darlings of retail stock traders over the past year and have seen their values soar high to a point of apparent disconnection from their fundamental financials.
  • It appears that one legendary investment fund is interested in AMC, none other than Renaissance Technologies (RenTech), a quant hedge fund that's famous for being one of the best-performing funds in modern history.
  • RenTech uses quantitative techniques to fish out for trends and signals in the securities markets and then place its bets. The legendary hedge fund was founded by Jim Simons, a former NSA codebreaker and MIT math professor, and now billionaire worth an estimated $25bn (Forbes).
  • In its latest 13-F filing showing the breakdown of its US stock market holdings at June end, it's shown that RenTech loaded up on AMC stock during the course of the second quarter (April-June) of this year. It tripled its stake from about 516,000 shares at March-end to 1.8 million shares three months later.
  • RenTech's AMC holdings are currently worth about $70mn. It looks significant but is an actual drop in the bucket compared to the hedge fund's entire stock portfolio of $80bn
  • RenTech's reasoning for loading up on AMC stock isn't known, but given the firm's history of successful bets, it seems the market signals the stock as a buy. That will be to the appeasement of retail traders who have driven the stock high even as the Covid pandemic cratered the underlying company's business.
  • Interestingly, RenTech was much into AMC before the 'meme stock' craze circa 2020. At the half-year mark in 2019, the fund owned 3.5 million AMC shares but largely sold them the same year. It also had a substantial stake in another market favorite; EV maker Tesla, with a split-adjusted 20 million shares at the end of 2019.
  • Given RenTech's quant-heavy trading strategies, it doesn't hold on to shares for long but regularly buys and sells enormous blocks of shares in certain companies. Looking at it that way, it seems the company missed out on the stock bonanzas of AMC and Tesla in 2020 as it largely trimmed its stake in these companies.
  • Now, RenTech maintains a small position in Tesla - 204,000 shares worth about $134mn after selling 623,000 shares in the recent quarter. As it sold those shares, it loaded up on others such as AMC, tech giant Amazon, chipmaker Nvidia, videoconferencing firm Zoom, and drugmaker Novo-Nordisk.
  • RenTech has its $80bn stock portfolio spread across a whole lot of stocks, with individual stakes in the low-hundred thousands all the way to hundreds of millions. Its two biggest holdings at June end were Zoom ($1bn) and Atlassian ($846mn).

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