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Hedge Fund Melvin Capital Tells Investors It Plans to Shut Down

Reuters2022-05-19

Hedge fund manager Gabe Plotkin, who boasted one of Wall Street's best investing records, on Wednesday told investors that he is shutting down his firm, Melvin Capital, after it suffered billions of dollars in losses.

"The appropriate next step is to wind down the Funds by fully liquidating the Funds' assets and accounts and returning cash to all investors," Plotkin wrote in a letter reviewed by Reuters on Wednesday.

Melvin Capital had $7.8 billion in assets at the end of April and the fund had lost 23% since January, a person familiar with the fund's finances said.

This year's losses come on the heels of steep losses in 2021 when Melvin Capital ended the year down 39%. The firm bet that shares of GameStop would tumble but was battered when retail investors took the other side and sent the stock surging.

The firm had $12.5 billion in assets at the start of 2021.

In the letter Plotkin said he had already raised a substantial amount of cash and cut the funds' exposure.

A spokesman for Plotkin declined to comment.

At the end of the first quarter Melvin's biggest investments included bets on Live Nation Entertainment , Hilton Worldwide Holdings, Amazon and Datadog. Their stock prices have fallen sharply in the last weeks, sparking speculation that a hedge fund might be trying to unwind positions.

Plotkin was a star investor at Steven A. Cohen's hedge fund SAC Capital Advisors and launched his own firm after SAC pleaded guilty to criminal insider trading charges. Melvin Capital quickly attracted attention and powerful investors and ended 2020, the year the pandemic began, with gains of 52.5%.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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Comment28

  • diggydog
    ·2022-05-19
    Another one bites the dust. Apes strong together [LOL] 
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  • Vincent1968
    ·2022-05-19
    Ok
    Reply
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  • Polited
    ·2022-05-19
    First of many dominos to fall.Brace yourselves, winter is coming.
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  • GggSlimeR
    ·2022-05-19
    Omggggg. Thanks & Do not like my comment 
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  • Vandalart
    ·2022-05-19
    Power of retail investors!
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  • Shot
    ·2022-05-19
    This is really bad
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  • SR050321
    ·2022-05-19
    Is ETF work same way as Hedge Fund ? i hope not. [Gosh] Although ETFs are generally considered lower risk than individual securities, they are not immune to some of the typical problems such as tracking errors and the chance that certain indexes may slow other market segments or active managers.tips can help investors determine whether an ETF is likely to face some trouble:1. Use caution when selecting ETF products that track narrow market segments; these products are considered risky and therefore require more evaluation.2. Examine the ETF's trading volume. Volume is a good indicator of liquidity and investors' interest. If the volume is high, the product is typically more liquid.3. Look at the assets under management to determine how much money is being managed and to meas
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  • Chris Tan
    ·2022-05-19
    🏃‍♂️🏃‍♂️🏃‍♂️
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  • diggydog
    ·2022-05-19
    It's all because apes strong together ‌[開心] ‌‌[開心] 
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  • drandy
    ·2022-05-19
    These people treat the stock market as a casino. Dangerous as heck.
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  • Keankb223
    ·2022-05-19
    Ok
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  • Tbun
    ·2022-05-19
    Ok
    Reply
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  • R n W
    ·2022-05-19
    Thank you
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  • wine18
    ·2022-05-19
    Ok
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  • Tailwind
    ·2022-05-19
    👌
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  • ccy1122
    ·2022-05-19
    [OK] [OK] [OK] [Bless] [Bless] [Bless] 
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  • 我发大财了
    ·2022-05-19
    Gg
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  • BlueDragon
    ·2022-05-19
    Ok
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  • Worpeng2002
    ·2022-05-19
    Pls like
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  • Mic6226
    ·2022-05-19
    Good 
    Reply
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