Melvin Capital started 2021 with $ 12.5 billion in net worth before retail Reddit investors caused the company to lose billions in its GameStop short positions.
The hedge fund had just over $ 8 billion in net worth as of late January, including a $ 2.75 billion investment from Citadel and Point72 Asset Management earlier this month, according to a report in the Wall Street Journal. That’s a 53% loss, according to people familiar with the company.
In the report, a client claims that Melvin “massively de-risked” its investment portfolio following the controversy over short selling GameStop shares. People familiar with the hedge fund said Melvin restructured its portfolio to improve its ability to easily exit securities. The hedge firm, as well as Citron Capital – another company involved in the shorts – reportedly closed their positions at GameStop last week.
Many of the key players involved in the GameStop Short Squeeze are outraged online after Robinhood – a platform with financial ties to Melvin – and other investment vehicles restricted trading GameStop stock in the middle of a price spike. Retail investors who appeared to be cut off from financial instruments made available to large hedge funds led to allegations of market manipulation.
The US Securities and Exchange Commission announced on Friday that this would be “tight” [reviewing] Actions by Regulated Companies ”, allegedly related to the situation around Citadel, Melvin, Robinhood and possibly the retail investors of the r / WallStreetBets subreddit. Robinhood is also facing two class action lawsuits in federal courts in Illinois and New York.
GameStop stock was trading at $ 325 as the markets closed on Friday after rising 67% in the past 24 hours.