The hedge fund, Melvin Capital lost around 53 percent while betting against GameStop in January 2021. The fund was founded in 2014 by businessman and entrepreneur, Gabriel Plotkin, also known as Gabe Plotkin.
The reason behind the huge losses is that the retail investors decided to pile into the widespread hedge fund short targets, including the struggling video game retailer.
The GameStop shares finished with a gain of 400 percent, a week prior to these events. After these proceedings, the total return of GameStop this year reached around 1625 percent. The stock that was closing at $10 only in October last year, closed at $325 in January this year.
Gabe Plotkin’s Melvin Capital had to then close out the short position it had at GameStop after undergoing heavy losses. The losses were reportedly more than 50 percent, 53 percent to be particular and they lost around 49 percent of their assets.
The assets of Melvin Capital now stand at $8 billion (emergency funding included), which was around $12.5 billion at the beginning of the year, after a few present investors decided to commit additional capital at the end of January 2021.
According to a source, Point72 and Citadel imbued nearly around $3 billion into the fund to hold up its finances. Both Citadel and Point72 declined to comment on any such questions. But sources knowledgeable about the returns of the fund have reported that Pint72 slid 10 percent in January and Citadel lost 3 percent, when the hedge fund was down to 1 percent on the investment it made a week past these events.
According to all the well-informed and knowledgeable reports, the funds liquidity is very strong and its influence is at its lowest ever since the fund beginning in year 2014.