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Hedge funds ravaged by the meteoric rise of stocks like GameStop Corp. and AMC Entertainment Holdings Inc. in January are still struggling to extricate themselves from those losses.
Melvin Capital Management, which lost more than $ 6 billion in January, is now down 46% for the year to June, the fund recently told investors. Maplelane Capital is down 39% for the period. Some other funds that suffered smaller losses during the equity surge even in January are doing better. Steven A. Cohen’s $ 22 billion in Point72 asset management and D1 Capital Partners’ $ 20 billion are up roughly 1% and 3.8% for the first half of the year, respectively, said people familiar with the performance of funds.
Nonetheless, these returns are lower than the market as a whole, with the S&P 500 rising 15.3% during this period, including dividends.
The January market maelstrom that enveloped a small but large group of funds was as shocking as it was swift. At the time, an army of bullish individual traders urged each other on platforms like Reddit to stack stocks and, at times, band together to step up losses among professional traders betting against these so-called memes stocks. Fund managers protested that hordes of social media were manipulating stock prices.
The rally caused big losses for star Wall Street investors, turned some individual investors into popular heroes, sparked a congressional hearing and caught the attention of the Securities and Exchange Commission. Almost six months later, the ramifications of these market events are still unfolding.
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