Top Hedge Fund AQR Is Betting Against AMC Stock. Here’s Why.

CMA (NYSE:CMA) The stock is in focus today after Cliff Asness of AQR Capital Management revealed the fund was short on the movie theater chain. As of the first quarter, the quantification-based company had more than $145 billion in assets under management (AUM), making it one of the largest hedge funds in the world. Approximately $52 billion of the company’s assets under management are attributable to 13F securities.

On CNBC, Asness called AMC stock “super expensive, super unprofitable, and super high beta and volatility.” Still, the short position represents a tiny portion of AQR’s holdings. The fund manager explained via Twitter (NYSE:TWTR) that the short represents only 0.12% of its portfolio over approximately 1,500 positions.

AQR performed exceptionally well this year in light of the S&P500 decline. The company has several different funds. Its Absolute Return fund is up 43% year-to-date at the end of May. Meanwhile, the Equity Market Neutral fund returned around 13% in May, up an impressive 52% year-to-date (YTD).

Despite its size, Asness’s shorts still created quite a bit of controversy among AMC bulls. Let’s get into the details.

AMC Stock: AQR’s Cliff Asness takes a short position

Several AMC stock bulls expressed their disapproval of Asness after he revealed his short position. In a Tweeter since made private, Asness replied:

“I have tremendous respect for retail investors who have done their homework and invest well. I have no respect for laser-eyed idiots who talk about “stonks” and call themselves “monkeys” who are PROUD of not knowing anything. It’s a subtle distinction, sorry to confuse.

If anything, the veteran hedge fund manager is right. With the rise of streaming services like netflix (NASDAQ:NFLX) and by Disney (NYSE:SAY) Disney+, movie theaters have been placed in a very precarious position. AMC was also unprofitable, posting a net loss of $337.4 million for the first quarter. In this rising rate environment, unprofitable companies are at high risk.

So, what is Asness rather bullish on? His fund holds several large-cap names in its top ten positions, including Alphabet (NASDAQ:GOOGNASDAQ:GOOGL) and Taiwan semiconductor (NYSE:TSM). AQR is also bullish on value names. Asness believes these stocks will have upside potential for several years.

At the date of publication, Eddie Pan did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Leave a Comment