A while ago, I used to do a “what am I missing” segment where I’d post on something that seemed obvious and ask…. well, what am I missing? I enjoyed these; sometimes I’d get really interesting responses, and overall writing just helps me clear my head so I always felt I could think through a problem better after posting on it / writing it up.
Two points on what you migh tbe missing - 2nd one more relevant.
1) The "turnout adjusted number of shares" you`re writing about are misleading since as far as I understand, a failure to show up i scounted as a "no". That`s the reason AMC can`t get even simply things approved any more - too many retail investors that don`t turn out to vote, irrespective of the topic. But this shouldn`t change the expected outcome of an approval.
2) ...and this might get weird now. A key part of your thesis is that you somehow can short AMC with reasonable risk, and you described how to do that via put options. However, this makes the assumption that the strike price does not get adjusted. But: Some significant corporate event can lead the OCC to adjust the option contract in order to guarantee smooth trading, e.g. through adjusting the strike price. One of the coporate actions that can lead to that sort of adjustments are stock splits (see e.g. https://www.fidelity.com/learning-center/investment-products/options/contract-adjustments) Yes, I know, technically the split has already happened through the introduction of APEs. But to be sure, I think one would have to wait until AMC officialyl declares the date of the vote (then they need to inform the OCC), and close to the annoucnement of that date. the OCC would publish a memo (https://infomemo.theocc.com/infomemo/search) on changes in the options contract, if there are any.
Obviously, I might be totally off with this point, let`s see what you think.
what we missed is that Antara can hedge their position on swap (they only have to keep the voting rights). Your post nicely points out how cheap they got their shares, and thus, how incentivized they are to just lock in their multi-bagger.
today's price action basically proves (to me, at least) that they're hedging. I had thought the overhang of the ATM was lifted, but no - this works like the opposite of an Accelerated Share Repurchase. Call it an ASS - Accelerated Share Sale. AMC sells the APE shares to Antara, who then sells them into the market (on swap, via their counterparty).
i mean, nothing really changes in the whole story to your points, except that there's still APE overhang, and, potentially, lots of it... .
I spent months waiting for the haier d shares spread to narrow during which time I enjoyed a steady downward trend in pricing, and I got to watch the spread widen too! This case is a bit different as there is a 90 days timetable, but since the share price could halve during this time I suppose it would need to be a hedged position.
Bid/offer on the options seems wide. For example, I see offer side (on OMON) at 2.32 on the march $4 puts. At that price, the worst case (and base case) outcome is negative
You mention that brandon sanderson is one of your favorite writers and suggest mistborn for first time readers.. But I think for a first timer a one volume such as Elantris (his first and some think his best) or Legion (my favorite) might be better choices. If one likes Sanderson's style then one can go to the more epic stories. Just my two cents.
Two points on what you migh tbe missing - 2nd one more relevant.
1) The "turnout adjusted number of shares" you`re writing about are misleading since as far as I understand, a failure to show up i scounted as a "no". That`s the reason AMC can`t get even simply things approved any more - too many retail investors that don`t turn out to vote, irrespective of the topic. But this shouldn`t change the expected outcome of an approval.
2) ...and this might get weird now. A key part of your thesis is that you somehow can short AMC with reasonable risk, and you described how to do that via put options. However, this makes the assumption that the strike price does not get adjusted. But: Some significant corporate event can lead the OCC to adjust the option contract in order to guarantee smooth trading, e.g. through adjusting the strike price. One of the coporate actions that can lead to that sort of adjustments are stock splits (see e.g. https://www.fidelity.com/learning-center/investment-products/options/contract-adjustments) Yes, I know, technically the split has already happened through the introduction of APEs. But to be sure, I think one would have to wait until AMC officialyl declares the date of the vote (then they need to inform the OCC), and close to the annoucnement of that date. the OCC would publish a memo (https://infomemo.theocc.com/infomemo/search) on changes in the options contract, if there are any.
Obviously, I might be totally off with this point, let`s see what you think.
what we missed is that Antara can hedge their position on swap (they only have to keep the voting rights). Your post nicely points out how cheap they got their shares, and thus, how incentivized they are to just lock in their multi-bagger.
today's price action basically proves (to me, at least) that they're hedging. I had thought the overhang of the ATM was lifted, but no - this works like the opposite of an Accelerated Share Repurchase. Call it an ASS - Accelerated Share Sale. AMC sells the APE shares to Antara, who then sells them into the market (on swap, via their counterparty).
i mean, nothing really changes in the whole story to your points, except that there's still APE overhang, and, potentially, lots of it... .
I spent months waiting for the haier d shares spread to narrow during which time I enjoyed a steady downward trend in pricing, and I got to watch the spread widen too! This case is a bit different as there is a 90 days timetable, but since the share price could halve during this time I suppose it would need to be a hedged position.
Bid/offer on the options seems wide. For example, I see offer side (on OMON) at 2.32 on the march $4 puts. At that price, the worst case (and base case) outcome is negative
You mention that brandon sanderson is one of your favorite writers and suggest mistborn for first time readers.. But I think for a first timer a one volume such as Elantris (his first and some think his best) or Legion (my favorite) might be better choices. If one likes Sanderson's style then one can go to the more epic stories. Just my two cents.
Any updated thoughts now that the special meeting proxy is out? Looks like another 1/3rd dilution took place in ape since antaras buy?