Why Is AMC Entertainment (AMC) Stock Up Today?

  • AMC Entertainment (NYSE:AMC) is outperforming the market today, up more than 7%
  • One reason for this is that billionaire Ray Dalio disclosed a stake in the movie theater chain
  • Another reason is that AMC has purchased a stake in a movie theater ad company
AMC stock: an AMC imax theater storefront
Source: Sundry Photography / Shutterstock.com

AMC Entertainment (NYSE:AMC) stock is in focus and climbing 7% after billionaire Ray Dalio’s hedge fund, Bridgewater Associates, disclosed that it had taken a stake in AMC. Additionally, the movie theater owner announced that it obtained a stake in National CineMedia (NASDAQ:NCMI), a small firm which sells in-theater ads.

Yesterday Bridgewater divulged that, during the first quarter, it bought 27,056 shares of AMC stock for $667,000. The hedge fund had not purchased any shares of AMC before last quarter.

Separately, AMC disclosed yesterday that it bought 6.8% of National CineMedia. According to Seeking Alpha, “National CineMedia Inc. is the 48% owner and managing partner of National CineMedia, a company which provides pre-movie advertising and marketing in theaters nationwide.”

Bridgewater’s purchase of AMC stock indicates that Dalio is upbeat on the outlook of the shares. Since Dalio is a prominent, successful investor, some owners of AMC’s stock may be encouraged by Bridgewater’s move.

AMC Stock Climbs as It Bets on Theater Ads

Meanwhile, in the years before 2020, National CineMedia was profitable. Specifically, its annual operating incomes between 2017 and 2019 ranged between $156.4 million and $162 million.

AMC’s acquisition of a 6.8% stake in National CineMedia may give some investors hope that the theater owner will eventually acquire a much greater share of the ad market. Such a development would give AMC significant exposure to the profits that National CineMedia could potentially generate now that most consumers’ Covid-19 fears are easing.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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