AMC Entertainment Is Most Expensive Stock For Short Sellers, But What Other Stocks Top The List?

With its persistent net losses, a recent reverse stock split, massive shareholder dilution and nearly $5 billion in debt, AMC Entertainment Holdings Inc (NYSE: AMC) may seem like an obvious candidate for short selling.

A new note from S3 Partners highlights why short-selling AMC may not be worth the cost.

S3 looked at stocks with at least $100 million in short interest and ranked them by their stock borrow fees. A stock borrow fee is a fee charged by a brokerage to short sellers who borrow shares of stock.

"High stock borrow fees can test the conviction level of short sellers as financing costs can take a large bite out of expected Alpha," S3 analyst Ihor Dusaniwsky said.

Related Link: Are Hedge Fund Short Sellers Hunting And Targeting Specific Bank Stocks?

Fees Adding Up: S3 estimates short sellers paid a total of $1.91 billion in stock borrow fees in the first quarter of 2023, up from $1.54 billion in the fourth quarter of 2022. Not surprisingly, AMC was the most expensive stock to short in the first quarter, costing short sellers $225 million in stock borrow fees. To make matters worse, AMC short sellers have also gotten burned by the stock's 33.2% year-to-date gain.

Highest Borrow Fees: Incredibly, short sellers are currently paying a 168.3% fee to borrow AMC shares, more than double the borrow fee of any other stock, according to S3.

But AMC isn't the only stock costing short sellers an arm and a leg. Here are the 10 stocks with the highest borrow fees:

• AMC Entertainment, 168.3% fee
• Evgo Inc (NASDAQ: EVGO), 77.5% fee
• Beyond Meat Inc (NASDAQ: BYND), 70.3% fee
• Upstart Holdings Inc (NASDAQ: UPST). 52.8% fee
• Nikola Corp (NASDAQ: NKLA), 52.3% fee
• Novavax Inc (NASDAQ: NVAX), 44.3% fee
• Quantumscape Corp (NYSE: QS), 21.3% fee
• First Republic Bank (NYSE: FRC), 20% fee
• Marathon Digital Holdings Inc (NASDAQ: MARA), 19% fee
• Xpeng Inc - ADR (NYSE: XPEV), 18.5% fee

Related Link: 10 Stocks That Are Crushing Short Sellers In 2023: Where Do Tesla, Apple, Lucid Motors Rank?

Benzinga's Take: The willingness for short sellers to pay these crazy high fees is a reflection of the strong conviction they have in their downside theses for the stocks mentioned.

Short selling is a costly, risky endeavor, but investors can also use this list of stocks with high borrow fees as a guide of which stocks to potentially avoid holding in a long portfolio as well.

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