Kynikos Associates founder and famed short seller Jim Chanos is still holding AMC Preferred Equity Units (NYSE: APE) as part of an arbitrage play.
What To Know: The legendary short seller believes the preferred shares should be trading at the same price as AMC Entertainment Holdings Inc (NYSE: AMC).
"We are still long the spread ... it's silly. They are the same piece of paper ultimately," Chanos said Wednesday at CNBC's Delivering Alpha Investor Summit.
AMC declared a special dividend in the form of APE, or AMC Preferred Equity units, at the beginning of August. The preferred shares were issued to all common stockholders.
AMC and APE function the same, although they are not yet freely convertible. But ultimately, they will be the same as they have the same claims on company assets, he said.
Chanos told CNBC that he expects a restructuring to close the spread.
He quickly followed that up by telling the AMC "Apes" that he expects the movie theater chain to survive, so there's no need to send him direct messages on Twitter (NYSE:TWTR), he said.
"It's not going out of business, but it needs to have its debts restructured and the bond holders will end up owning AMC and I would suspect the spread will collapse," Chanos said.
AMC, APE Price Action: Chanos put on the arbitrage play with AMC Entertainment trading around $10 and APE trading around $6.
At time of publication, AMC Entertainment was up 2.28% at $7.62 and APE was up 2.08% at $3.44.
Photo: sergeitokmakov from Pixabay.
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