Melvin Capital is giving the Reddit audience something to cheer on Friday.
The hedge fund, which has become Wall Street’s worst example for a group of individual investors, recorded a 49% loss in the first quarter, according to a report by Bloomberg News on Friday.
Melvin Capital was at the center of a closely watched fracas between the professional investors and amateur traders who gathered on social media forums like Reddit’s r / WallStreetBets.
The hedge fund, run by Gabe Plotkin, a former investment manager of hedge fund titan Steve Cohen, has suffered the biggest losses from an increase in heavily shorted ‘meme’ stocks like video game retailer GameStop GME,
and film chain AMC Entertainment Holdings AMC,
and it appears that Melvin’s pinched wounds do not heal, perhaps to the chagrin of Plotkin and to the delight of the army of amateur investors determined to keep the collective to the pros.
“51% to go!” a user posted on r / WallStreetBets in response to Melvin’s reported losses.
A Melvin Capital spokesperson declined to comment on the Bloomberg report to MarketWatch. However, one person familiar with Melvin’s performance confirmed the magnitude of the quarterly loss.
The reports of increasing pain for Plotkin come after his fund plunged 53% in January thanks to an unprecedented short squeeze developed by the retailers targeting the fund using social media such as Reddit and Discord and free trading platforms such as Robinhood. increase stock values in GameStop and AMC.
Still, Plotkin managed to return 22% to investors in February, but Bloomberg reported that the fund dropped 7% last month.
Melvin Capital had a huge short position in GameStop that helped catalyze shoppers’ initial strategy. Some Redditors are blaming hedge fund investors like Plotkin and Co. to reap the benefits of financial markets that some consider to be counterfeit.
Melvin’s loss has been hailed by others as “the ultimate loss porn,” on a number of threads, with “loss porn” representing the Reddit audience’s way of describing malicious pleasure.
Some users on Reddit speculated, without proof, about the possibility that Melvin was still caught in the GameStop short squeeze. However, recent reports suggest that is unlikely.
A spokesperson for the fund stated that Plotkin covered his GameStop short on Jan. 26, a day after the fund received a much-needed $ 3 billion infusion from Plotkin’s mentor, Point72’s Steve Cohen, and his former boss, Citadel’s Ken Griffin.
Shares of GameStop closed 7% on Friday and lost more than 17%. However, the video game retailer’s share is up more than 740% in the last year. In comparison, the Dow Jones Industrial Average DJIA,
has risen more than 10% so far in 2021, the S&P 500 index SPX,
has won almost that much too, and bitcoin prices BTCUSD,
are up more than 100% in the same period.
Still, store staff seemed content to bask in the glow of the hedge fund investor’s pain, musing that investing in Melvin “seems like a great way to turn a million dollars into hundreds of thousands of dollars.”