An unprecedented flood of bets by amateur investors may have cost Wall Street hedge funds billions of dollars on Wednesday, but one private equity firm was sitting pretty.
A $600 million bond investment that buyout firm Silver Lake made in AMC Entertainment Holdings in 2018 is now in the money thanks a 301% surge in the struggling movie theater chain’s shares on Wednesday, fueled by traders organizing on social media platforms such as message board Reddit.
Silver Lake’s notes can be converted into stock at an exercise price of $13.51 per share. AMC shares, which had closed at $4.96 on Wednesday, jumped 301% on Wednesday to $19.90, leaving Silver Lake sitting on a $284 million gain, were it to convert its notes currently.
Silver Lake declined to comment.
AMC’s shares had fallen 70% in 2020 to close the year at $2.12 apiece, as many of its movie theaters closed or operated with reduced capacity during the COVID-19 pandemic.
But the company became the latest darling of retail traders this week, which organize in social media to bet on heavily shorted stocks such as GameStop Corp.
In July, Silver Lake agreed to restructure its convertible bonds AMC as part of a debt restructuring deal that allowed it to stave off bankruptcy, and also gave it an additional $100 million in financing.
Silver Lake, which is led by Egon Durban and Greg Mondre, has around $75 billion in assets and committed capital.