The investor’s Berkshire Hathaway conglomerate held a 9% stake in Store Capital at the last count, making it the real-estate investment trust’s second-largest shareholder. Store counts AMC among its 10 biggest customers – the cinema chain was leasing 14 of its properties at the end of March, and accounted for 1.4% of its base rent and interest, filings show.
Thanks to retail investors’ ravenous demand for its stock, AMC has raised vital funds to weather nationwide closures of its theaters during the pandemic. It raked in $428 million earlier this year by selling 43 million shares at almost $10 a pop, and pocketed a further $231 million this week by selling 8.5 million shares to Mudrick Capital at about $27 a share.
It’s hard to imagine AMC netting a fraction of those amounts without the meme-stock boom in January and the frenzied buying of its shares recently. After all, its stock price was about $2 at the start of this year.
AMC’s retail-powered fundraising should allow it to stay in business and pay off its debts. Store CEO Mary Fedewa disclosed on an earnings call in August that the REIT had struck a deal with AMC to help it deal with the pandemic. It may have allowed the cinema chain to pay partial rent or defer payments.
Moreover, AMC CEO Adam Aron has praised his landlords as “heroes” for agreeing to renegotiate lease agreements. “The concessions that they made are very much appreciated,” he said on an earnings call in March.
The upshot is that Buffett could emerge as un unlikely winner from the AMC short squeeze. The theater company has cashed in on retail demand for its shares, enabling it to repay landlords such as Store, which is good news for Berkshire and other Store shareholders.