ANALYSIS-Shorts circle GameStop and AMC, sensing retail fatigue

By David Randall and John McCrank

NEW YORK, June 7 (Reuters) - Bearish investors are ramping up bets against meme stocks GameStop Corp GME.N and AMC Entertainment Holdings Inc AMC.N, spotlighting how short sellers have grown bolder during a broader market selloff that has pummeled risky post-pandemic favorites once beloved by retail traders.

Overall short interest as a percentage of the company's float stood at 24% for GameStop and 22% for AMC, near their highest levels in a year, according to data from S3 Partners.

Retail investors are at a point now where they are just sitting on the sidelines and theyve lost money in many cases, said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.

At the same time, institutional investors dont have the luxury of sitting on sidelines and they are much more comfortable going short so they are becoming the more dominant player in the market, he said.

The meme stock craze erupted in early 2021, when an army of individual investors piled in to shares of GameStop, AMC and other once-unfashionable companies, contributing to eye-popping rallies in their shares and forcing hedge funds to unwind their bearish bets against them - sometimes after sustaining considerable losses.

More recently, retail traders' speculative fervor appears to have cooled amid a broader market selloff fueled by worries over a hawkish Federal Reserve. The S&P 500 is down 13.5% year-to-date after approaching the cusp of a bear market last month, while GameStop and AMC are down 13.7% and 56%, respectively.