AMC and APE from a Securities Lending Perspective | Part 1
February 1, 2023
Keith Min, DataLend Product Specialist
AMC and APE from Securities Lending Perspective
DataLend provides best in class securities lending data, covering all asset classes, regions and markets globally. Here we analyze the recent performance of meme stocks AMC and APE as seen in DataLend.
Meme stock, AMC Holdings Company, has made headlines once again as plans to raise capital have resulted in an upcoming vote to equally merge AMC common shares and AMC’s preferred shares, APE. As of January 26th, AMC common shares closed at $5.28 while APE preferred shares closed at $1.79 creating an arbitrage opportunity that has led to increased volatility in the lending market.
Given the merger price would likely occur between the current share price of both issues, DataLend has observed drastic fee, or cost to borrow, movement in both the common and preferred shares. Since the December 22nd, 2022, announcement, the average fee for new borrows in AMC, already a hard to borrow security before the announcement, has increased by 219%. Across all open positions in AMC common shares, the average fee to borrow the security has risen by 435% since December 21st. The preferred shares, APE, observed a similar spike in the average fee of new borrows in the days immediately following December 22nd, increasing by 157% by December 26th. These fees have tapered off a bit from their peak but still sit firmly in the hard to borrow market.
Utilization of lendable shares remained near 100% for AMC common shares, as have many meme stocks since 2021. But once again, the preferred shares have increased in utilization from 71% prior to the announcement to 92% by January 26th. Looking further into the increase in utilization, the amount of shares on loan, in the lender-to-broker market, has almost doubled from 14.4 million to 28.4 million shares over the same time frame.
With AMC intending to hold their shareholder vote within 90 days of December 22nd, additional details are likely to emerge and influence the securities lending market.
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DataLend, the market data service within EquiLend’s Data & Analytics Solutions group, tracks daily market movements across more than 62,000 unique securities in the $2.5 trillion securities finance market. www.datalend.com
EquiLend is a global financial technology, data and analytics firm offering Trading, Post-Trade, Data & Analytics, RegTech and Platform Solutions for the securities finance industry. EquiLend has offices in New York, New Jersey, Boston, Toronto, London, Dublin, India, Hong Kong and Tokyo and is regulated in jurisdictions around the globe. www.equilend.com