Melvin Capital ends month with more than $ 8 billion in assets after investors add money: source

BOSTON (Reuters) – Melvin Capital, the hedge fund at the center of the GameStop drama, lost 53% in January but received pledges from fresh investors in the last days of the month, a source close to the fund said on Sunday.

Melvin ended January with more than $ 8 billion in assets after starting the year with around $ 12.5 billion in assets, the source said.

The company, founded in 2014 by Gabe Plotkin, had bet that stock in video game retailer GameStop, which traded for less than $ 5 five months ago, would drop. But a wave of retail investors, comparing ratings on the social media platform Reddit and using the Robinhood online trading app, took the other side of Plotkin’s trade to send the stock up 1625. % this month to close at $ 325 on Friday.

The Wall Street Journal first reported the loss.

Hedge funds Point72 Asset Management and Citadel gave a capital injection of $ 2.75 billion to Melvin Capital earlier in the week, allowing it to close the position with a large loss.

“The liquidity of the fund’s portfolio is solid. The use of leverage is at the lowest level since the creation of Melvin Capital in 2014, ”said the source.

Citadel lost less than 1% on its Melvin position in its flagship fund in January, a person familiar with the matter said on Sunday.

As news of losses at many hedge funds spread in recent days, speculation has mounted on which companies may be forced to shut down. Several investors and fund managers said clients have been more patient with some companies that have a long and solid track record, likely allowing them to survive the heavy losses this month.