The hedge fund of City investor Crispin Odey has placed a bet against the shares of cinema chain AMC, one of a group of so-called meme stocks favoured by retail traders this year.
A short position — which bets that the share price of the target firm will fall — has been taken out against AMC by Odey manager James Hanbury, the Financial Times reported.
Odey Asset Management, which manages about $4.1bn in funds, operates under the trading name Brook Asset Management after a strategy revamp late last year. Hanbury manages about $1.5bn across his funds, according to the paper, including the LF Brook Absolute Return fund.
Odey Asset Management was contacted for comment.
The bet on AMC became one of Hanbury’s biggest winners in July, after its shares fell more than 40% from $54 at the start of the month to $29.84 on 5 August.
Hanbury told investors in letters that the rise of retail traders participating in markets has created some “compelling short opportunities” for firms like Odey. His LF Brook Absolute Return fund has posted a gain of 3.7% this year, according to the report.
A rush by investors gathering on social platforms such as Reddit has pushed AMC’s price up from $2 at the end of 2020, though demand has faltered amid extreme swings in volatility. Traders also targeted stocks that were heavily shorted by hedge funds, including GameStop and BlackBerry.
The damage across short positions, as a result, caused significant losses for Wall Street funds such as Melvin Capital, as managers struggled to exit positions amid rising demand.
Trading platforms including Robinhood, EToro and Trading 212 struggled during the intense retail demand for meme stocks in January and February this year, at times suspending or limiting new positions.
The short position comes after a judge ruled in March that a remuneration scheme used by Odey Asset Management was unlawful, which deferred profits returned to partners over two to three years.
A person close to Odey Asset Management said the firm and the 17 executives named, which included Hanbury, are planning to appeal the decision.
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