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• Melvin had $7.8 billion in assets after first-quarter
• Plotkin failed to recover his firm from GameStop short squeeze in 2021
Melvin Capital Management which suffered billions of dollars of losses after the GameStop Corp (NYSE: GME) fiasco, is planning to shut down the firm, Bloomberg reported on Wednesday.
The New York-based hedge fund, which managed $7.8 billion at the end of April, will liquidate the funds and return cash to investors.
The news followed after Gabe Plotkin, the founder and the fund manager, failed to revive the firm after incurring huge losses in 2021.
“The past 17 months has been an incredibly trying time for the firm and you, our investors,” Plotkin wrote in a letter seen by Bloomberg.
“I have given everything I could, but more recently, that has not been enough to deliver the returns you should expect. I now recognize that I need to step away from managing external capital.”
Plotkin started Melvin in 2014 after leaving Steve Cohen’s Point72 Asset Management and posted returns of about 30% a year through 2020.
However, in January 2021, a group of retail investors short squeezed against Melvin’s bearish bets, including GameStop, pushing the hedge fund to a 55% loss.
Even though the hedge fund earned money in subsequent months, ending 2021 with returns down nearly 39%, the firm tumbled more than 23% through April this year.
Picture Credit: FT
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