Hedge fund giants Steve Cohen and Ken Griffin are joining forces to save a fellow trader whose fugitive positions, such as GameStop, have been shot down.
Griffin City and Cohen’s Point72 Asset Management are investing $ 2.75 billion in Melvin Capital Management, which has seen its recent stock bets fall frustrated by a small army of investors with dreams of rapid enrichment.
The fund, led by former lieutenant Gabe Plotkin, fell 30 percent, the Wall Street Journal reported.
The rescue comes as retail investors swarm online forums, such as “wallstreetbets” aboard Reddit, to push each other to invest in cheap stocks with short positions against them, using no-commission trading sites like Robinhood.
GameStop, against which Plotkin bet, had a short 102% interest in its outstanding shares on Friday, making it a major target for sending a larger share through what is known as a short squeeze.
Shares of GameStop rose about 178 percent between Thursday’s close and Monday’s early trading, while investors tried to squeeze short sellers like Plotkin and Andrew Left, who complained last week about being threatened with his predictions that the stock will fall.
“It was short in a market that no longer allows people to stay short,” one hedgehog complained. “Today you take a position after doing your job, then some guys on Reddit use their phones to buy stocks of money and end up with a broken face. He’s crazy. ”
“I’ve known Gabe Plotkin since 2006 and he’s an exceptional investor and leader,” said Cohen, who will add $ 750 million to his existing fund. “We are excited to have the opportunity to invest additional capital and take a non-controlling income share in Melvin Capital.”
Melvin Capital posted a 47% gain in 2019 after losing money in 2018. About a third of Point72’s 2019 performance comes from its $ 1 billion stake in Melvin.
Griffin and Cohen have openly competed for talent trading in the past, Griffin once hired – and then fired – Cohen’s brother-in-law at the Citadel.
But Plotkin – and he hopes to recover from the chaos – seems to have united the two men.
“Gabe Plotkin and the team have achieved exceptional results throughout Melvin’s history,” Griffin said in a statement to The Post after confirming that Citadel and its partners will pump $ 2 billion into Melvin’s books. “We have great confidence in Gabe and his team.”
“If Ken Griffin gives $ 2 billion to Gabe Plotkin, he won’t do it to be a nice guy,” said another hedge fund manager. “He clearly believes that Plotkin will return.”