Citadel Fund LLC and Point 72 Asset Management are investing $ 2.75 billion in Citadel Fund Alvin Capital Management, which has been hit hard by a series of small bets to start the year.
The cash inflow is expected to help stabilize Melvin, who lost 30% through Friday in 2021, people familiar with the firm said. Melvin started the year with $ 12.5 billion and was one of the best-performing hedge funds on Wall Street in recent years. Melvin’s losses have led to small bets against companies and shocked customers and other traders. In other smaller positions, Melvin placed bets against rising stock of videogame retailer Gamestop Corp.
Garh and its partners are investing $ 2 billion and Point 72, which had already invested more than $ 750 million to $ 1 billion by 2019 in Melvin. The investments are in Melvin’s fund and the firm includes non-controlling revenue shares. Melvin founder Gabe Plotkin was a top portfolio manager at Point72’s predecessor firm, SAC Capital Management, before he left to start Melvin.
It cannot be determined how much revenue share Citadel and Point72 will get.
Melvin was down about 15% for the year last weekend – but heavy stocks plummeted on Friday. Goldman Sachs Group Inc.’s basket of 50 shares, bringing its profit to 25% on Friday as part of market capitalization, with the lowest interest as share capitalization. In comparison, the S&P 500 gained 2.4% for the period. Unlike many other hedge funds, Melvin has a huge and aggressive short book.