Melvin Capital, a hedge fund at the center of the Gametop drama, lost 53 percent in January but received a commitment to fresh cash from investors in the last days of the month, a source familiar with the fund said on Sunday.
The source said that Melvin ended the year with more than $ 8 billion in assets after starting the year with $ 12 billion in assets.
The firm, founded in 2014 by Gab Plotkin, had bet that stock of ill-fated video game retailer Gametop, which traded at less than $ 5 five months earlier, would fall. But the other side of Plotkin’s trading closed at $ 325 on Friday to send the stock up 1,625 percent this month, using a wave of retail investors, comparing notes on the social media platform Reddit and using online trading app Robinhood.
The Wall Street Journal first reported the loss.
Hedge funds Point 72 Asset Management and Citadel gave Melvin Capital a $ 2.75 billion capital infusion earlier in the week, enabling it to close that position with a large loss.
“The fund’s portfolio liquidity is strong. Since the establishment of Melvin Capital in 2014, leverage usage is at a minimal level.
The stronghold lost less than 1 percent to Melvin’s position in its flagship fund in January, a person familiar with the matter said on Sunday.
As news of losses in several hedge funds spread in recent times, speculation began to emerge about which firms might be forced to close their doors. Many investors and fund managers said clients are more patient with some firms that have a longer and stronger track record, possibly allowing them to avoid deep losses this month.