Equities

Renaissance Buys 4.82M AMC, GameStop Shares Before Rally

Renaissance Technologies invests in AMC and GameStop ahead of a rally, highlighting hedge funds' strategic plays in volatile meme stocks.

By Alex P. Chase

5/16, 13:54 EDT
AMC Entertainment Holdings, Inc.
article-main-img

Key Takeaway

  • Renaissance Technologies acquired 3.82M shares of AMC and 1M shares of GameStop ahead of a significant rally, doubling their values.
  • The resurgence in meme stock trading, influenced by social media, saw AMC and GameStop's sharp price fluctuations in Q1 2024.
  • Hedge funds show varied strategies on meme stocks; Balyasny Asset Management added positions while DE Shaw & Citadel Advisors reduced theirs.

Renaissance Technologies' Strategic Investments

Renaissance Technologies, the quantitative hedge fund established by the late Jim Simons, has notably adjusted its investment portfolio in the first quarter of 2024, as indicated by recent regulatory filings. The firm acquired 3.82 million shares of AMC Entertainment Holdings Inc. and initiated a new position with 1 million shares of GameStop Corp. during the three months ending March 31. These moves came ahead of a significant rally in these stocks, reminiscent of the 2021 meme-stock trading frenzy. The value of these investments surged as shares of AMC and GameStop more than doubled at the start of the week following a post on X by Keith Gill, known as "Roaring Kitty," who had previously gained attention for his bullish stance on GameStop.

Market Dynamics and Meme Stock Phenomenon

The trading landscape for meme stocks such as GameStop and AMC has been characterized by high volatility, influenced by retail investor sentiment and social media. This volatility was evident when both stocks saw sharp declines on Wednesday after substantial gains earlier in the week. The resurgence in meme stock trading was partly spurred by a post from Roaring Kitty, leading to a rapid increase in share prices. However, despite the initial surge, pressures remain as both stocks are trading well below their pandemic peaks, with AMC and GameStop shares falling 39% and 29%, respectively, in the first quarter of 2024.

Hedge Fund Movements in Meme Stocks

Renaissance Technologies was not the only hedge fund engaging with meme stocks during the early months of the year. Balyasny Asset Management LP added positions in both AMC and GameStop, while DE Shaw & Co Inc and Citadel Advisors LLC reduced their stakes. Schonfeld Strategic Advisors LLC and ExodusPoint Capital Management LP exited their positions in GameStop. These movements highlight the diverse strategies hedge funds are employing in response to the volatile meme stock market. Marco Iachini of Vanda Research noted that "Quant/hedge funds are much better equipped to handle these situations nowadays," suggesting a strategic approach to participating in and potentially benefiting from the meme stock phenomena.

Street Views

  • Marco Iachini, Vanda Research (Neutral on AMC and GameStop):

    "Quant/hedge funds are much better equipped to handle these situations nowadays. If anything, we believe the chances that they participate along with retail in the squeeze but also lean against and then exit these trades ahead of retail traders are high."