Shares of Hycroft Mining (NASDAQ:HYMC) and AMC Entertainment (NYSE:AMC) are in focus after Eric Sprott reported selling 4.08 million shares of HYMC stock. Hycroft engages in the mining and development of gold and silver. Because of AMC’s stake in the company, Sprott’s sales have led some investors to wonder if he’s giving up on AMC stock, but that’s unclear at this time.
In March, AMC announced that it had taken a 22% stake in Hycroft as part of a “bold diversification move.” The stake, worth $27.9 million at the time, was purchased at a price of $1.19 per share. Each share also came with one warrant priced at $1.07 per share. In total, AMC acquired 23.4 million shares and warrants of HYMC. At the time, CEO Adam Aron explained:
“Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago. It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue.”
During March, Sprott announced that he would acquire the same amount of shares and warrants that AMC purchased, priced at $1.19 as well. Now, just over three months later, the precious metals investor has reduced his position by about 17%. Let’s get into the details.
Eric Sprott Sells HYMC Stock
On June 24, Sprott disclosed selling 4.09 million shares of HYMC. After the sale, he still owns 19.32 million shares, or a 9.8% stake. According to WhaleWisdom, Sprott is also still the third-largest shareholder of the company.
It’s not exactly clear why Sprott sold, as he is not required to disclose the reasoning behind his sale. However, when Sprott disclosed his purchase, the price of gold was hovering near $1,900 per ounce. Today, the price is near $1,800 per ounce. Meanwhile, silver was trading around $25 per ounce back in March. Today, the price has fallen to around $19.80.
Still, AMC has made no changes to its position since its initial purchase. Shares of HYMC are also trading below AMC’s purchase price of $1.19, which means that both AMC and Sprott are currently sitting on losses for their share purchases.
Overall, it remains to be seen whether Sprott has given up on AMC stock. In the meantime, is Hycroft a suitable investment? InvestorPlace’s Louis Navellier believes the company has potential and rates it as a “B” in his Portfolio Grader. He notes that Hycroft produced 56,045 ounces of gold and 397,546 ounces of silver last year, which brought in $110.7 million of revenue. He adds the company’s stockpile of potential reserves makes HYMC stock “an intriguing situation.”
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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.