This week, privately held company Silver Lake has stood out as a bandit, making a leap into the stock market frenzy caused in recent weeks by users of a Reddit message board.
Silver Lake was able to make a profit of approximately $ 112 million on Wednesday with the sale of 44.4 million new shares of the operator of the film chain AMC Entertainment Holdings Inc. AMC,
according to what he presented one Friday to the Securities and Exchange Commission.
The Menlo Park-based private equity firm, California, gained its advantages after individual traders, grouped in an online trading forum, drastically raised the price of AMC shares, along with GameStop Corp. GME,
and a lot of other companies that had become popular targets for professional short sellers.
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Silver Lake secured its new shares on Wednesday by converting about $ 600 million in AMC debt it owned that was issued in July, when the film chain rushed to apply for financing loans. its theaters remained largely closed and its shares traded more than $ 4 per share, according to FactSet data.
By selling the new stock on Wednesday, the same day it converted into debt, Silver Lake on Thursday avoided a sharp decline in shares, as the mobile trading app Robinhood blocked users of some trading 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 conversion to equity may seem out of their reach. AMC had convertible bonds worth $ 3 billion outstanding as of Friday, with a sizable share at a strike price of $ 18.95, according to FactSet.
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The recent short-term struggle has been framed as Wall Street’s confrontation with Main Street at a time when the pandemic has exacerbated the divide between America’s rich and poor and when billions of dollars of fiscal and monetary stimulus ‘have spread through the financial markets. But Silver Lake’s score underscores the degree to which big professional players make big gains on the same Wall Street bets as day traders.
Read: The GameStop and AMC drama doesn’t stop with the stock market
“What would you expect them to do?” Said Marty Fridson, Lehmann investment director Livian Fridson Advisors, referring to the major institutional players who have taken over the recent speculative stock prices. “It’s not like the big financial agents feel a certain amount of solidarity.”
“For me, the whole‘ populist ’theme is really a side show,” said Fridson, a veteran of the “junk bond” or high-yield market.
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AMC closed 53.7% higher on Friday at $ 13.26 per share and was up 525.5% year-over-year so far, according to FactSet data.
The broader stock market suffered on Friday, with the Dow Jones Industrial Average DJIA, the S&P 500 SPX and the Nasdaq Composite Index COMP reserving a weekly decline of more than 3% amid volatility in a handful of high profile stocks.
Silver Lake did not respond to a request for comment Friday.