Melvin Capital GameStop Hedge Fund Faces Huge Losses

Melvin Capital, a hedge fund run by Ken Griffin, has been hit with huge losses due to its short position in GameStop. The fund lost 53% of its value in January 2021.

The losses were largely due to the sudden surge in GameStop's stock price, which rose from $17.25 to $380 in just a few weeks. This was largely fueled by a group of retail investors on the Robinhood trading platform.

The short squeeze was triggered by the retail investors buying up GameStop stock, forcing Melvin Capital and other short sellers to cover their positions, which in turn drove the stock price even higher.

Melvin Capital lost 53% in January, a staggering loss that's a major blow to the hedge fund's reputation and finances.

The heavy losses came as retail investors piled into popular hedge fund short targets, including GameStop, which saw its shares finish last week with a gain of 400%.

Melvin Capital's assets under management now stand at more than $8 billion, down from roughly $12.5 billion at the beginning of the year.

Citadel and Point72 infused close to $3 billion into Melvin Capital to shore up its finances, a move that's likely to be seen as a lifeline for the struggling fund.

Point72 slid 10% in January, while Citadel lost 3% in January, according to sources with knowledge of the funds' returns.

The fund's liquidity is strong and its use of leverage is at the lowest level since its inception in 2014, a positive sign for the fund's future prospects.

Melvin Capital, a hedge fund that bet against GameStop, lost more than 50% in January.

The heavy losses come as retail investors piled into popular hedge fund short targets, including the struggling video game retailer.

Shares of GameStop finished last week with a gain of 400%, bringing its total return this year to 1,625%.

Melvin Capital's assets under management now stand at more than $8 billion, down from roughly $12.5 billion at the beginning of the year.

Citadel and Point72 infused close to $3 billion into the fund to shore up its finances.

Point72 slid 10% in January, while Citadel lost 3% in January.

The fund's liquidity is strong, and its use of leverage is at the lowest level since its inception in 2014.

Here are some key statistics about the GameStop frenzy:

Melvin Capital, a prominent hedge fund, lost a staggering 53% in January due to its ill-fated bets against GameStop and other struggling retailers. This massive loss was triggered by a record rally in GameStop's stock, which skyrocketed 400% in just a week.

The fund's assets under management plummeted from $12.5 billion at the beginning of the year to over $8 billion after receiving emergency funding from Citadel and Point72. These two hedge funds infused close to $3 billion into Melvin Capital to shore up its finances.

The heavy losses were largely due to the fund's short positions in GameStop and other stocks targeted by retail investors on Reddit's WallStreetBets forum. The forum's members more than tripled in just a week to over 7 million, fueling a frenzy of buying and driving up the prices of these stocks.

Here are some key statistics on Melvin Capital's losses:

Melvin Capital, a hedge fund, is shutting down after losing billions of dollars in the GameStop frenzy.

The fund, run by Gabe Plotkin, started 2021 with over $12 billion but lost 53% in January, forcing it to scramble to cover its short positions.

Gabe Plotkin recognized he needed to step away from managing external capital.

He founded Melvin in 2014 and had gained fame as one of the most successful portfolio managers to emerge from Steven A. Cohen's former hedge fund, SAC Capital.

Melvin was propped up by a $2.75 billion bailout from Point72 and Citadel, but Citadel has since redeemed its investment.

Point72 also redeemed the infusion it made in the wake of the GameStop frenzy.

Gabe Plotkin had considered reconstituting the fund before deciding to close it.

Melvin Capital Management lost a staggering 53% in January, a source familiar with the matter told CNBC. This massive loss was due to the fund's bets against GameStop and other stocks that unexpectedly skyrocketed in value.

The heavy losses were caused by retail investors piling into popular hedge fund short targets, including GameStop. Shares of GameStop finished last week with a gain of 400%, bringing its total return this year to 1,625%.

The stock closed Friday's session at $325, a far cry from its October price of under $10. This wild price swing left many hedge funds, including Melvin Capital, reeling.

Citadel and Point72 infused close to $3 billion into the fund to shore up its finances. Point72 slid 10% in January, while Citadel lost 3%.

Here's a breakdown of the key statistics:

The fund's assets under management now stand at more than $8 billion, down from roughly $12.5 billion at the beginning of the year.