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Melvin Capital ends month with over $8 billion in assets after investors added cash: source

Published 01/31/2021, 10:39 AM
Updated 01/31/2021, 08:30 PM
© Reuters. Trading information for GameStop is displayed on the Robinhood App

By Svea Herbst-Bayliss

BOSTON (Reuters) - Melvin Capital, the hedge fund at the center of the GameStop (NYSE:GME) drama, lost 53% in January but received commitments for fresh cash from investors in the last days of the month, a source familiar with the fund said on Sunday.

Melvin ended January with more than $8 billion in assets after having started the year with roughly $12.5 billion, the source said.

The firm, founded in 2014 by Gabe Plotkin, had bet that ailing video game retailer GameStop's stock, which traded at less than $5 five months ago, would fall.

But a wave of retail investors, comparing notes on social media platform Reddit and using online trading app Robinhood, took the other side of Plotkin's trade to send the stock up 1,625% this month to close at $325 on Friday.

The Wall Street Journal first reported the loss.

"The fund's portfolio liquidity is strong. Use of leverage is at the lowest level since Melvin Capital's inception in 2014," the source said.

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

Citadel’s hedge funds, along with founder Ken Griffin and firm partners, put $2 billion into Melvin. The funds lost less than 1% in January on their Melvin position and are down 3% overall for the month, a person familiar with the matter said on Sunday.

As news of losses at many hedge funds spread in recent days, speculation mounted about which firms might be forced to shut their doors. Several investors and fund managers said clients have been more patient with certain firms that have a long and strong track record, likely allowing them to survive this month's deep losses.

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Latest comments

Transfer of wealth is happening power to the people
Pablo you are a fool if you think that many rookie investors did not lose LOTS of money playing this game as well. Eveyone has the power of CHOICE....that is the only power we need. The power to choose what we want to with our lives. Do we want to spend our lives crying at what we don’t have and what others do? The richest man in the world is the man whom wants nothing.
id argue the most powerful person are the ones with nothing to lose... that said hedges would be richer if they donated their money to everyone on retail then
Powerful? No, it just means they are more likely to be reckless. Everyone has more than someone else. To think that you or I are entitled to what they have simply because they have more is just plain silly.
Which currency will rise the most tomorrow?
Silver
Dogecoin and silver
8 billion..we need 80 billion..u want gme share so much..we r glad to sell for 100,000 a share
Very bad traders thinking GME will keep going up. Based on what? Hope? LOL
Alternate article: Lots of retail investors made a ton of money.
Hedge funds and #metoo Wsb buyers will lose big. Look at Dryships and VW charts. Chamath is smart. He made his money, took his chips and ran
the ones that FOMO after the squeeze maybe, right now the big squeeze hasn't really started yet.
Many (but certainly not all) of the retail buyers here are uninformed patsies, simply following the herd. Most of them will probably lose money - in part because they’ve been convinced that this is a noble cause and not a profit making endeavour. Hopefully those that went long on actual shares are using trailing stops and not stop limits. If they are using stop limts, they may need a sizable spread between the stop and the limit, cuz when this falls, it may *******right past their sell limit.
The trader in Missouri who had a cost basis of $4.5k made $1M+ on GME.   What stock next week or the week at after?  Smaller traders exuberance could make this game work over and over again, because there are between 10K and 15K hedge funds, taking are trading money everyday.
HOOOOOOLLDDDDD! The squeeze isnt done! WE like the stonk!
i feel disqusted when i hear the names of these short selling hedge funds
please
Janet Yellen took 7 million dollars from big techs and hedge funds. Is she a ********or a crook? CONFLICTS of interests. Never be a secretary.
Eh?
she’s a fraud. Should be in jail. Trump was right all these years about the dems. People who voted for them must regreting now.
The crooks are back in business...yayyyy
hard to believe
power to the people!
Yeah the shorts have definitely NOY ben returned, you just need to look at the volumes and short interest % to see that. Don't understand why you report such lies.
They should fund me to run gambling style trades and make easy money still
I'm rooting for WSB but man is the deck stacked against u guys.. you're trying to change 140yrs of status quo. expect all the fawkery
Robinhood & his merry men, beware of the revenge from hedge funds.....👻
Left told he will not work any more for shorting and now he will work for wining stocks, thus he got additional money, It will be cheating if he short again.
no, he just said he won't publish his reports about shorting. learn to read & comprehend
They DID NOT cover their short position. At best they offloaded it to another criminal hedge fund. Let’s see how much they’re worth when GME goes to $1000+ in the near future 🚀🚀🚀
I feel like this is an uno reverse card on the long-short hedge funds. Ive been down 53% in a month, when I was first learning how to trade options haha.
Yes but the huge volitility is giving them an out, holding short means the sale of puts are covered and a one week put $50 out of the money is $100, that's nearly a third of the stock price. You dont have to be a genius to realize you can recoup your lose and make a huge profit selling the puts untill you finaly sell at the money to get assigned and cover the short sale.
Won’t happen guy, they already covered... now just gonna be monkeys taking money from monkeys... dont get me wrong, i celebrate the fact of what happened, but the show is over... the civilian side of this has no idea what it’s doing, and it’s gonna crash in the next few days... of course more shorts will arrive at these ridiculous levels, but it aint at 5$ strike price anymore....
A 53% drawdown gets you Billions in new investment....Really.
Fresh capital = fresh short gme
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