5 Investors Betting Big on Redbox (RDBX) Stock

  • Chicken Soup for the Soul Entertainment (NASDAQ:CSSE) will soon acquire Redbox (NASDAQ:RDBX) for $375 million.
  • However, RDBX stock's market capitalization is currently hovering near $700 million.
  • Investors may be interested to know that some big institutional investors like Vanguard Group and Apollo Management are still betting on the stock.
RDBX stock - 5 Investors Betting Big on Redbox (RDBX) Stock

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Despite the S&P 500 and Nasdaq Composite both slipping more than 3% today, shares of Redbox (NASDAQ:RDBX) are up more than 10% at the time of writing. Last month, it was reported that Chicken Soup for the Soul Entertainment (NASDAQ:CSSE) had agreed to acquire the video-rental company. As part of the all-stock deal, RDBX shareholders will receive 0.087 shares of CSSE stock for each share of RDBX stock owned. The deal implied an acquisition price of $375 million, which includes $325 million from taking on Redbox’s debt. Today, Redbox trades at a market capitalization of roughly $670 million. What gives?

It seems that Redbox may be the latest meme stock. The company is the sixth most popular name on r/WallStreetBets at the time of writing, with mentions surging 555% in the past 24 hours. In addition, Benzinga reports that short interest as a percentage of float was 39.86% as of June 9.

We all remember what happened with GameStop (NYSE:GME) at the beginning of 2021. A high short interest paired with retail popularity has the potential to send stocks soaring, even if the fundamentals don’t back the company for such large gains. Meanwhile, a company usually trades at or near its acquisition price after the acquisition is made public. As InvestorPlace contributor Chris MacDonald explained, “Any sort of deviation (discount or premium) to this price is usually an indication the deal might not fall through (discount) or another bidder may show up (premium).”

Still, MacDonald doesn’t believe this is the case and attributes the price appreciation to retail investors bidding up a meme stock. Even then, traders can still capitalize on a meme-driven stock, although it carries massive risk.

With that in mind, let’s take a look at the company’s five largest shareholders.

5 Investors Betting Big on RDBX Stock

Tracking institutional ownership is very important for investors. These large investors provide liquidity and price support for stocks. During Q1, only 26 funds reported owning Redbox, an increase of four funds from the prior quarter. In addition, four funds reported increasing their position, while seven funds completely sold out. Clearly, RDBX is not popular among institutional investors. With that in mind, let’s take a look at the five largest shareholders:

  1. Apollo Management: 34.52 million shares. Apollo kept its position constant during Q1.
  2. Standard General: 979,771 shares. Standard General kept its position constant during Q1.
  3. Vanguard Group: 418,412 shares. Vanguard sold 147,380 shares during Q1.
  4. Geode Capital Management: 145,869 shares. Geode purchased 145,869 shares during Q1.
  5. Millennium Management: 119,305 shares. Millennium purchased its entire position during Q1.

On the date of publication, Eddie Pan 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.

Article printed from InvestorPlace Media, https://investorplace.com/2022/06/5-investors-betting-big-on-redbox-rdbx-stock/.

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