Melvin Capital offers the Reddit crowd something to enjoy on a Friday.
The hedge fund, which came to exemplify the worst on Wall Street for a bunch of individual investors, recorded a 49% loss in the first quarter, according to a Bloomberg News report on Friday.
Melvin Capital has been at the center of closely watched turmoil between professional investors and amateur traders who gather on social media forums such as Reddit’s r / WallStreetBets.
The hedge fund, led by Gabe Plotkin, a former investment manager for hedge fund titan Steve Cohen, has borne the brunt of losses caused by rising stocks of very short-circuited memes, such as video game retailer GameStop GME,
and AMC Entertainment Holdings AMC movie chain,
and it seems that Melvin’s wounds have not been repaired, probably to Plotkin’s disgust and delight in the army of amateur investors who are determined to stick it collectively to professionals.
“51% to leave!” posted a user on r / WallStreetBets in response to Melvin’s reported losses.
A Melvin Capital spokesman declined to comment on the Bloomberg report to MarketWatch. However, a person familiar with Melvin’s performance confirmed the magnitude of the quarterly loss.
Reports of the growing pain for Plotkin come after its fund fell 53% in January due to an unprecedented short run by retailers who were seen targeting the fund using social media such as Reddit and Discord and duty-free trading platforms such as Robinhood to drive increases odds in GameStop and AMC.
However, Plotkin managed to return 22% to investors in February, but Bloomberg reported that the fund fell 7% last month.
Melvin Capital was seen holding a massive short position in GameStop, which helped catalyze the initial strategy of the retail crowd. Some Redditors accuse investors of hedge funds such as Plotkin and Co. of enjoying the benefits of financial markets that some consider rigged.
Melvin’s loss is hailed by others as “the latest porn loss,” in many ways, “loss porn” is how the Reddit crowd describes schadenfreude.
Some Reddit users have speculated, without evidence, about the possibility of Melvin being stuck in the short GameStop game. However, recent reports suggest that this is unlikely.
A fund spokesman said Plotkin covered his GameStop short on Jan. 26, a day after the fund received a $ 3 billion infusion from Plotkin’s mentor, Steve Cohen of Point72, and his former boss. , Ken Griffin at the Citadel.
GameStop shares closed up 7% on Friday and lost more than 17%. However, the shares of the video game retailer have increased by over 740% in the last year. By comparison, Dow Jones Industrial Average DJIA,
has gained over 10% so far in 2021, the S&P 500 SPX index,
also earned almost as much, and bitcoin prices BTCUSD,
they increased by over 100% in the same period.
However, the retail team seemed pleased to let the pain of hedge fund investors shine through, considering that investing in Melvin “seems like a great way to turn a million dollars into hundreds of thousands of dollars.”