[ad_1]
Citadel LLC and Point72 Asset Management are investing $ 2.75 billion in hedge fund Melvin Capital Management, which was hit hard by a series of short bets to start the year.
The influx of cash should help stabilize Melvin, who in 2021 lost 30% until Friday, people close to the company said. Melvin started the year with $ 12.5 billion and had been one of Wall Street’s top performing hedge funds in recent years. The losses came from Melvin’s array of short bets against companies and stunned clients and other traders. Among other short positions, Melvin bet against the surge in the stock of video game retailer GameStop Corp.
Citadel and its partners are investing $ 2 billion and Point72, which had already invested more than $ 1 billion in Melvin in 2019, $ 750 million. The investments are in the Melvin fund and include non-controlling income shares in the company. Melvin founder Gabe Plotkin was a senior portfolio manager at Point72’s predecessor, SAC Capital Management, before leaving to found Melvin.
It was not possible to determine the share of revenue that Citadel and Point72 would receive.
Melvin had fallen about 15% for the year until the end of last week, but heavily sold stocks soared on Friday. Goldman Sachs Group Inc.’s basket of the 50 stocks with the highest short-term interest rate by market cap share soared on Friday, bringing its gains for the year to 25%. By comparison, the S&P 500 gained 2.4% over the period. Unlike many other hedge funds, Melvin has an expansive and aggressive short book.
[ad_2]
Source link