Melvin Capital, the hedge fund for the GameStop drama center, lost 53 percent in January, but received commitments to get cash from investors in the last days of the month, a source familiar with the fund said Sunday.
Melvin ended January with more than $ 8 billion in assets after starting the year with about $ 12.5 billion in assets, the source said.
The firm, founded in 2014 by Gabe Plotkin, had bet on the fall in shares of video game retailer GameStop, which was trading at less than $ 5 five months ago. But a wave of retail investors, who compared notes on the social networking platform Reddit and used the online trading app Robinhood, took the other side of Plotkin’s trade to send shares up 1.625% this month to close at $ 325 on Friday.
The Wall Street Journal first reported the loss.
Point72 Asset Management and Citadel hedge funds gave Melvin Capital a $ 2.75 million capital infusion earlier in the week, allowing it to close that position with a large loss.
“The liquidity of the fund’s portfolio is strong. Leverage use is at its lowest level since Melvin Capital was established in 2014, ”the source said.
Citadel lost less than 1 percent of its Melvin position to its flagship fund in January, a person familiar with the matter said Sunday.
As news of losses in many hedge funds spread in recent days, there was speculation about which companies might be forced to close their doors. Several investors and fund managers said customers have been more patient with certain companies that have a long and strong track record, which will likely allow them to survive this month’s deep losses.