Melvin Capital, the hedge fund run by Gabe Plotkin that struggled with heavy losses last yr because it reeled from wrong-way bets on GameStop, is shutting down, based on a letter sent to investors on Wednesday that was reviewed by The Latest York Times.
Mr. Plotkin wrote to his investors that he had decided that the “appropriate next step” was to liquidate the fund’s assets and return money to all investors.
Mr. Plotkin, who founded Melvin in 2014, also wrote that he recognized he needed to “step away from managing external capital.”
Mr. Plotkin, a protégé of the hedge fund billionaire and Latest York Mets owner Steven A. Cohen, had wagered that shares GameStop, AMC Entertainment and other mall mainstays from the Nineteen Nineties would fall as their businesses shrank.
As a substitute, the stocks skyrocketed when amateur investors, coordinating via Reddit, Twitter and other social media sites and determined to outsmart big Wall Street funds, kept buying up shares and propping up their price.
That caused Melvin, which began 2021 with greater than $12 billion, to lose 53 percent in January, forcing it to scramble to cover its so-called short positions. It was propped up by a $2.75 billion bailout from the hedge funds Point72, run by Mr. Cohen, and Citadel, in addition to fresh capital from latest investors.
Citadel began redeeming its investment last yr and now not had money with Melvin as of last month. Point72 has also redeemed the infusion it made within the wake of the GameStop frenzy, based on a person conversant in that firm’s investments.
Before deciding to shutter his fund, Mr. Plotkin had considered reconstituting it. The choice to shut Melvin, which Mr. Plotkin named after his late grandfather, is a blow to Mr. Plotkin’s fame. He had gained fame as one of the successful portfolio managers to emerge from Mr. Cohen’s former hedge fund, SAC Capital.
Bloomberg earlier reported the news of Melvin’s closure.