Melvin Capital Management, the hedge fund that lost billions of dollars during the rise of memes last year, told clients it was shutting down its funds.
Gabe Plotkin, the firm’s founder in New York, told clients he plans to return cash to investors after a difficult period. “The last 17 months have been an incredibly difficult time for the company and for you, our investors,” Plotkin said in a letter to investors seen by the Financial Times.
Melvin suffered a severe blow in January 2021 after its scratching position at GameStop – a bet that the video game retailer’s share price would fall – failed miserably when an army of Reddit investors began buying GameStop shares, pushing the company’s value up as much as 2,400 percent.
Melvin suffered further losses this year due to the decline in the market and the sale of technology shares. The fund, which managed a total of $ 7.8 billion as of April, fell 23% in the first four months of the year.
“I gave everything I could, but lately it has not been enough to provide the returns you should expect. I now recognize that I need to stay away from external capital management,” Plotkin wrote in the letter.
The move comes days after fund investors forced Melvin to back out of a controversial plan to charge performance fees again, even though she was still in the process of recovering the huge loss she suffered at the height of the corona plague. Plotkin admitted that he was “deaf in the beginning”.
Plotkin’s Melvin Capital to wind down funds Source link Plotkin’s Melvin Capital to wind down funds