Report: Gamestop, Other Bets Cost Hedge Fund 53% in January Losses
Melvin Capital, the hedge fund at the center of the GameStop stock frenzy, lost roughly 53% in January on GameStop and several other bets, according to The Wall Street Journal (WSJ).
The losses were the aftermath of a move by several retail traders who drove up shares the hedge fund bet against in a short squeeze that surprised many on Wall Street.
Melvin started 2021 with approximately $12.5 billion and now has more than $8 billion, WSJ reported. Melvin’s current figures include the $2.75 billion in emergency funds Citadel LLC, its partners and billionaire investor Steven Cohen’s Point72 Asset Management pumped into the hedge fund last Monday to help Melvin close out their position with an enormous loss.
It started with a SMART discovery, Melvin Capital (hedge fund) broke the cardinal rule of short selling. They took on way too big of a short position given the size of their fund, how heavily shorted the stock already was and the amount of shares outstanding.
— Stephanie Ruhle (@SRuhle) January 30, 2021
The cash infusion constituted part of a deal where Point72 and Citadel get non-controlling revenue shares in Melvin for three years, according to the WSJ. (Read more from “Report: Gamestop, Other Bets Cost Hedge Fund 53% in January Losses” HERE)
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