Melvin Capital, the hedge fund at the heart of the GameStop drama, lost 53 percent in January, but received new cash commitments from investors in the last days of the month, a source familiar with the fund said on Sunday.
Melvin ended January with assets of more than $ 8 billion, after starting the year with assets of about $ 12.5 billion, the source said.
The company, founded in 2014 by Gabe Plotkin, has bet that the shares of the troubled video game vendor GameStop, which traded for less than $ 5 five months ago, will fall. But a wave of retail investors, comparing ratings on the social networking platform Reddit and using online trading app Robinhood, took the other side of Plotkin’s trades to send shares up 1,625 percent this month to close at $ 325 on Friday.
The Wall Street Journal first reported the loss.
Point72 Asset Management and Citadel hedge funds offered a $ 2.75 billion capital infusion to Melvin Capital earlier this week, allowing it to close the position at a huge loss.
“The liquidity of the fund’s portfolio is strong. The use of leverage is at its lowest level since the establishment of Melvin Capital in 2014 “, said the source.
The city lost less than 1% of Melvin’s position in its flagship fund in January, a person familiar with the matter said on Sunday.
As news of losses on many hedge funds has spread in recent days, speculation has surfaced about companies that could be forced to close their doors. Several investors and fund managers said customers have been more patient with some companies with long and strong experience, likely allowing them to survive this month’s deep losses.