Private equity firm Silver Lake stood out as a bandit this week, lifting the stock market frenzy caused in recent weeks by users of a Reddit message board.
Silver Lake managed to make a profit of about 112 million dollars on Wednesday, by selling 44.4 million shares newly created by the difficulties operator of the film chain AMC Entertainment Holdings Inc. I HAVE C,
in a hot market for the company’s shares, according to a report submitted to the Securities and Exchange Commission on Friday.
The private equity firm in Menlo Park, California, gained its advantage after individual traders, grouped on an online trading forum, dramatically raised the price of AMC shares, along with GameStop Corp. GME,
and a lot of other companies that had become popular targets of professional short sellers.
Read: Commercial frenzy of AMC shares could prevent bankruptcy, but filmmaker still faces years of recovery
Silver Lake secured its new shares on Wednesday by converting AMC’s approximately $ 600 million in equity, which was issued in July, when the film chain ran to borrow to support the financing, as its theaters remained largely closed and its shares traded closer to $ 4 per share, according to FactSet data.
By selling new shares on Wednesday, the same day it converted debt, Silver Lake on Thursday avoided a sharp decline in shares, as the mobile trading app Robinhood blocked users of some transactions in shares of AMC and other companies.
Companies issue convertible debt as a way to raise cash, even when the “strike” or the price of converting into equity may seem far from over. AMC had $ 3 billion in convertible bonds outstanding since Friday, with a sizable portion priced at $ 18.95, according to FactSet.
Read: Wall Street Seeks Ways to Avoid Reddit Traders’ Footprint as a “Force to Consider”
The recent short-lived struggle has been framed as a confrontation between Wall Street and Main Street at a time when the pandemic has exacerbated the divide between rich and poor in America and as billions of dollars of fiscal and monetary incentives have fallen on financial markets . But the Silver Lake score highlights how big the professional players who win big winnings are on the same Wall Street bets as the day traders.
Read: The drama of GameStop and AMC does not stop at the stock market
“What would you expect him to do?” said Marty Fridson, investment director at Lehmann Livian Fridson Advisors, referring to the big institutional players who have seized on recent speculative stock prices. “It’s not like the big financial players feel a certain sense of solidarity.”
“For me, the whole ‘populist’ issue is really a side show,” said Fridson, a veteran of the “junk bond” or high-yield market.
See: GameStop frenzy focuses on clearing centers as investors weigh systemic fears
AMC closed 53.7% higher on Friday at $ 13.26 per share, up 525.5% from a year earlier, according to FactSet data.
The broader stock market skidded on Friday with the Dow Jones Industrial Average DJIA, S&P 500 SPX index and Nasdaq Composite Index COMP, each reserving a weekly decline of more than 3% amid volatility in a handful of high-profile stocks.
Silver Lake did not respond to comments on Friday.