AMC is the best candidate for an institutional revenge
AMC is the most held security among retail investors and that has become the most valuable asset to long institutions. Based on all available data sources it is clear that shorts have not covered yet and in fact they have doubled down or tripled down. Certain market makers and brokers also joined in the price suppression frenzy by diluting the shares of the company on the hope that they can buy them back cheaper later. This is the biggest mistake shorts have made. They just add nitro fuel to the rocket! They will regret this soon.
As the data below shows, the institutional investors of AMC are not simply interested in squeezing the shorts but they want to put some short institutions out of business, believe it or not, for malpractice and manipulations since the SEC has shown no interest in changing the way the market is operating.
Some short funds and institutions have been utilizing their market making associates or affiliates to dilute certain stocks using an infinity short loop perfectly explained by Overstock CEO Patrick Byrne in his latest interview with one of retail investors.
The chart below (top institutional holders of AMC) shows a significant increase in institutional involvement in AMC squeeze that indicates no sign of retreat. You may wonder why? I will dissect the charts below from Fintel and Ortex and will explain few patterns and comparisons.
The major institutional holders you see on the above charts are the primary force behind the AMC price action and a source of conviction among retail investors. Let's quickly take a look at the net worth of these institutions versus the major shorts: BlackRock is the world's largest asset management firm, with Assets under Management of almost $7.4 trillion. The Vanguard Group, Inc. is an American registered investment advisor based in Malvern, Pennsylvania with about $7 trillion. State Street Global Advisors is the world's third-largest asset manager and provider of exchange traded funds (ETFs), with total assets under management of $3.5 trillion as of December 31, 2020. On the other hand, we have some major shorts such as Citadel Securities manages $34 billion in assets. Citadel Advisors has a portfolio of $384 billion; Virtu Financials Inc. has a total asset worth $10.4 billion; and Susquehanna (an option Market Maker). Susquehanna International Group, LL. P.'s portfolio is also worth about $72.5 billion. There are other major AMC shorts such as Simplex Trading but they are not market makers and therefore "less able" to actively dilute the shares of AMC. Currently, Simplex Trading's portfolio is worth at least $2.82 billion.
Looking at the net worth of these institutions, it is no secret that the AMC shorts may lose everything and for a good reason. They are taking advantage of market with certain loopholes that may or may not be illegal by nature but they are certainly illegal if used in certain ways. The SEC has shown no interest in dealing with these issues and is more interested in preserving status quo or maintaining an "orderly market" giving ample time favorably to shorts to get their act together and possibly reduce the short squeeze mania that could potentially disrupt the market.
Citadel knows their days are over and they are trapped in their short positions hiding phantom share which they have created over time and repeatedly pushed through the system via an infinity loop with the help of OTC markets and dark pool trading. Notably, according to Bloomberg Citadel "updated its liquidity terms this year for all investors, reverting to a formula that under certain circumstances limits quarterly withdrawals to 6.25% -- meaning it would take 16 quarters (four years) to fully pull out." These are troubling signs.
Citadel Securities is set to receive its first outside investment in a deal. Venture-capital firm Sequoia Capital and cryptocurrency investor Paradigm have agreed to invest $1.15 billion in the Chicago-based firm, the company told The Wall Street Journal. Sequoia partner Alfred Lin will also join Citadel Securities' board.
In a recent article entitled Citadel's $1.15 billion cash infusion isn't a bailout but the final test of Ken Griffin's 'Death Star' the author claims this bailout isn't about retail investors or even Robinhood. It's about Griffin's real rival: Goldman Sachs.
Ultimately, it seems like this fight is not a fight between retails and Citadel. The retails are the biggest assets of AMC and they are one of the reasons the institutional interest in the stock has increased dramatically. But the retail has done its job and will continue to buy and hold. It is now very much an institutional battle and all signs point to yet another short squeeze in the chain of infinite squeezes like the one TSLA experienced. The goal is set.
AMC in downtrend? No problem. Blackrock bought 9 million shares of AMC entering into year 2022 with a plan. See chart below:
As the chart above shows these institutions started buying AMC at the end of 2020 and primarily ignored the January events (AKA Robinhood and Citadel collusion/scandals) and continued to buy.
These institutions at some point in April 2021 reduced the buy pressure for two possible reasons: a) They already knew the entire float is sold perhaps multiple times (and as I compare this to GME chart later this point becomes more clear) b) They wanted to dry up the volume and stop feeding the beast. A beast that can easily take advantage of lack of regulations with the current seemingly legal infinity loop injecting non-existing shares into the system. The same pattern is detected from late October 2021 as indicted by the red box in the bottom right corner in the chart above which will be discussed later.
Obviously, these long institutions did not stop buying in April waiting for one squeeze to happen. As the chart shows they were not interested in selling when the price hit $72. In fact, as the chart below shows, they continued to buy after the June run-up. Why? This is an indication that the infinity squeeze is on. Anyone who has watched how short squeezes play out would notice something is different about AMC.
Yes. Infinite squeeze may be in horizon for AMC. As the chart below shows, the same institutions along with many more funds and institutions not only did not sell any shares, they continued to buy more AMC shares after the June run-up.
Interestingly, the buying pressure from these institutions again stopped late September and perhaps for the same two reasons described above. The key here is time. Infinity squeezes are the most effective when they are dragged for a prolonged periods of time. From a technical point of view, 200 EMA is the best friend of an infinity squeeze candidate. If this chart is an indication of anything it would be that it is about time institutions "create" another run-up through volatility (sudden up and down) and utilization of gamma ramp.
Now, why major institutions and funds such as Blackrock and Vanguard have taken matters into their own hand?
When a financial system does not have a mechanism to protect the interest of all participants equally some players take matters into their own hands. The inability of SEC to regulate the market is nothing new.
Citadel once was a victim of payment for order flow and according to their court filings in 2004, they ask the SEC to patch up a hole in the system but the SEC as usual failed. Here is what Citadel lawyers identified as one of the problems in the system in the concluding paragraph:
"For our listed options markets to reach their potential, the Commission must prohibit practices that create conflicts of interests between broker-dealers and their customers and that inhibit competitive, transparent, and deep markets. Market participants and exchanges should be required to display firm quotes and be held accountable for failing to honor quotes. Payment for order flow and internalization without meaningful price improvement should be banned because they disadvantage customers, undermine competition, and distort market prices."
Well, if you can't beat them join them! They simply could not beat the system so they joined in as they saw this opportunity widely available in the system to exploit. Now, those same lines are being used against Citadel itself but they can rest assured that SEC is not going to do anything about it because they tried to prevent losing money to a malpractice in the system and they failed.
Now Citadel et al are trying to enter crypto market and many institutional rivals are fearful of this and try to stop it at all costs. Retail investors only hope they succeed so it will be a win-win situation for all except the bad apples of the market.