After losing about 30% this year, Gabe Plotkin’s Melvin Capital scored a$2.75 capital injection from hedge fund titans Ken Griffin of Citadel and Steve Cohen of Point72 Asset Management. This according to a recent article in Bloomberg.
The article reports that Citadel will invest $2 billion and Point72 will invest $750 million and, in return, both investors will receive a non-controlling revenue share in Melvin. It also notes that Melvin may receive an additional $1 billion infusion from other investors on February 1.
“The capital infusion comes after Melvin Capital, which started the year with about $12.5 billion in assets, has seen its short bets, including GameStop Corp., go awry, spurring the losses, people familiar with the firm said.”
According to the article, this year’s rough patch is rare for Plotkin, whose firm has returned an average of 30% a year since it launched in December 2014 (after working with Cohen for a decade). In a statement, Citadel founder Ken Griffin said, “Gabe Plotkin and team have delivered exceptional results over the history of Melvin. We have great confidence in Gabe and his team.” Cohen described Plotkin as “an exceptional investor and leader.”
“Short-selling has been a perilous business this year,” the article notes, adding that while some managers have given it up all together, Plotkin has continued to make bets on falling stocks.
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