The head of the hedge fund at the center of last month’s GameStop frenzy says Redditors targeted him with anti-Semitic insults and text messages.
Melvin Capital founder Gabe Plotkin made the disturbing statement in the prepared testimonies he plans to deliver to the House Financial Services Committee hearing on Thursday about the recent populist revolution in the stock market.
Melvin became the top target for novice traders on Reddit’s WallStreetBets forum because he had taken a short position on GameStop, which meant he was betting that the stock price of the troubled video game retailer would go down.
While Reddit users encouraged each other to “trade in the opposite direction” of Melvin’s investments, they also personally targeted Plotkin, he said.
“Many of these posts were linked to anti-Semitic insults directed at me and others,” Plotkin said in his testimony. “The posts said things like ‘it’s very clear we need a second holocaust, the Jews can’t go on with this.’
WallStreetBets has a reputation for being bad-mouthed and emaciated. Its users are often referred to as “delays” (an offensive insult to people with intellectual disabilities) and Keith Gill, the Redditor accredited with the direction of the GameStop rally, goes to “DeepF-ingValue” .
But Reddit CEO Steve Huffman defended WallStreetBets in his prepared testimony, saying the 9.1 million-member message board is an online community with “significant depth.”
“WallStreetBets may seem messy or chaotic from the outside, but the fact that we’re here today means they’ve managed to raise important issues about equity and opportunity in our financial system,” Huffman said.
Plotkin’s testimony also detailed how the unprecedented rise in the price of GameStop shares affected him both professionally and personally.
Melvin Capital, who Plotkin christened his grandfather’s name, closed its short position at GameStop with losses during the last week of January as the company’s share price rose to a high of 483 dollars per share.
Melvin had held that position since it was founded six years ago because the fund believed GameStop’s business model of selling video games to brick-and-mortar stores “was being overtaken by digital downloads over the Internet,” Plotkin said. .
Melvin abandoned the bet “not because our investment thesis had changed, but because something unprecedented was happening,” Plotkin said. “We also reduced many other Melvin positions with significant losses (both long and short) that were the subject of similar publications.”
Despite the turmoil, Plotkin insisted that Melvin’s $ 2.75 million investment from Ken Griffin’s Citadel and Steve Cohen72’s point in late January should not rescue the fund, as it faced strong losses.
“Sure, Melvin was managing a tough time, but we always had excess margin and weren’t looking for a cash infusion,” he said.