Hedge fund Melvin Capital, torpedoed by the GameStop frenzy, is shutting down.

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Hedge fund Melvin Capital, run by Gabe Plotkin, which has been battling heavy losses last year due to wrong bets at GameStop, is shutting down, according to a letter sent to investors Wednesday by The New York Times.

Mr Plotkin wrote to his investors that he has decided that the “next appropriate step” is to liquidate the fund’s assets and return cash to all investors.

Mr. Plotkin, who founded Melvin in 2014, also wrote that he understood that he needed to “get away from managing foreign capital”.

Under the auspices of hedge fund billionaire and New York Mets owner Steven A. Cohen, Mr. Plotkin had bet that GameStop, AMC Entertainment, and other mall shares from the 1990s would decline as their business dwindled.

Instead, stocks skyrocketed as amateur investors continued to buy stocks and push their prices higher, collaborating via Reddit, Twitter, and other social media sites, determined to undermine the major Wall Street funds.

This resulted in Melvin, who had $8 billion in assets under management in January 2021, to lose billions of dollars as he struggled to close his so-called short positions. Hedge funds managed by Cohen and Citadel were backed by a $2.75 billion bailout from Point72 and fresh capital from new investors.

Before Mr. Plotkin decided to close his fund, he had considered re-creating it. Decision to shut down Melvin named after Mr. Plotkin deceased grandfather, It’s a blow to Mr Plotkin’s reputation. He had built a reputation as one of the most successful portfolio managers to come out of Mr. Cohen’s former hedge fund, SAC Capital.

Bloomberg Earlier, he had given the news that Melvin was closed.