Latest News

The Wall Street Journal: Melvin Capital, which took a bath on GameStop and meme stocks, to liquidate funds

0

Melvin Capital plans to close its funds and return the cash to its investors, capping a stunning reversal for a firm that lost big on the surge in meme stocks in the early days of the pandemic.

In a letter to investors that was reviewed by The Wall Street Journal, Gabe Plotkin, Melvin’s founder, disclosed the winding down of the funds, saying, “The past 17 months has been an incredibly trying time.”

Melvin had been, until last year, one of the top-performing hedge funds in the industry.

Its executives as recently as last week had been soliciting clients for their thoughts on what new fee arrangements seemed fair to them and to Melvin going forward. Plotkin had previously tried to do away with Melvin’s so-called high-water mark, a standard industry arrangement in which hedge funds don’t collect performance fees until their clients are made whole from prior investment losses. The proposal met with resistance from many of Melvin’s clients, and Plotkin withdrew that plan and apologized to investors.

While Melvin made up some of its huge January 2021 losses from the rally in GameStop Corp. 
GME,
-8.87%

and other so-called meme stocks, its focus on fast-growing companies dealt it further setbacks this year as investors soured on such stocks and its losses widened. This year through April, Melvin had lost 23%. Since its start, it has averaged an 11.9% return.

An expanded version of this report appears on WSJ.com.

Also popular on WSJ.com:

This could be a lost decade for stocks.

There’s a new media mogul tearing up Hollywood: ‘Zas is not particularly patient.’

Personal Finance Daily: IRS audit rates keep dropping and FTC warns baby-formula scammers are ‘exploiting’ family fears over shortage

Previous article

Dispatches from a Pandemic: ‘It’s pure panic’: Florida parents of twins spent more than 4 hours driving to find baby formula

Next article

You may also like

Comments

Leave a reply

Your email address will not be published.

More in Latest News