Who owns AMC?
It's a simple question, right?
Yes. And it's WAY more important than you think.
The other day, my foolish older brother Fredo asked "why won't AMC just die already?"
My first thought was... that's a good question. So let's talk about why AMC has not gone down even though Wall Street hates the stock
AMC's Institutional Ownership
According to Yahoo Finance!, just 25% of AMC shares are held by institutions.
This is actually VERY low. As an example, 58% of Apple (AAPL) share are held by institutions. For Tesla (TSLA), it's 41%.
So most of AMC's shares are held by individuals - many of whom are never-say-die apes that have no interest in selling.
Also, let's look at the institutions that do hold AMC shares. The top 10 are:
% of Shares Outstanding
Vanguard Group, Inc
Capital World Investors
State Street Corporation
Baillie Gifford and Company
Geode Capital Management, LLC
Jennison Associates LLC
Northern Trust Corporation
Norges Bank Investment Management
They three keys here are
- Vanguard Group, Inc
- Blackrock Inc.
- State Street Corporation
Why are these 3 firms so important?
It's because they run index funds. And index funds don't pick stocks. Index funds simply own the stocks what's in a particular index.
For example, the Vanguard Total Stock Market Index Fund has a whopping 2.71% of outstanding AMC shares. Vanguard didn't decide they like AMC. They simply bought the stock because it's in the CRSP US Total Market Index - the basis for the fund.
So as long as AMC can remain in the indexes that underly these funds, the funds themselves can't sell AMC.
An institution can crush a small or mid-cap stock by dumping a bunch of shares in the market. But since AMC's institutional ownership is dominated by index funds, that can't really happen here.
What Would Kill AMC?
Well, if AMC was kicked out of a major index for some reason, that would be a problem.
But really, the risk is the APES deciding they've had enough, and selling.
Now what could cause that?
Well... it could be:
- Disappointing earnings and/or revenues
- Movie box office weakness
- A big drop in the market where people just want cash
- Fresh sales of shares
- Brokers restricting buying and selling of AMC
Now, we've just pointed out what could go wrong for AMC. So let's talk about...
What Could Go Right?
What if people decide they REALLY, REALLY want to start going to the movies again in 2022?
Especially with everything from Top Gun to Thor to Doctor Strange to Indiana Jones to Black Panther coming.
And what if AMC's teased partnership with GameStop turns into something big?
And what if Amazon or Netflix or Disney or whoever decides they actually do want to own movie theaters to showcase their content?
We are not AMC cheerleaders, and we're not telling you to buy or sell.
We are simply pointing out that good things are possible.
I would like to see AMC start looking into bringing back “The Drive In” movie experience….. that would be a very very good thing