Melvin Capital, the hedge fund at the heart of GameStop’s drama, lost 53% in January, but received new money commitments from investors in the last days of the month, said a source familiar with the fund on 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 company, founded in 2014 by Gabe Plotkin, bet that the stock of video game retailer GameStop, which traded less than $ 5 five months ago, would fall. But a wave of retail investors, comparing notes on the Reddit social media platform and using the online trading app Robinhood, took the other side of Plotkin’s trading to send shares up 1.625 percent this month, closing to $ 325 on Friday.
The Wall Street Journal reported the loss for the first time.
The hedge funds Point72 Asset Management and Citadel gave Melvin Capital a capital injection of $ 2.75 billion earlier in the week, allowing it to close that position at a major loss.
“The liquidity of the fund’s portfolio is strong. The use of leverage is at its lowest level since Melvin Capital started in 2014, ”said the source.
Citadel lost less than 1 percent in its Melvin position at its main fund in January, a person familiar with the matter said on Sunday.
As news of losses in many hedge funds spread over the past few days, speculation about which companies might be forced to close their doors has increased. Several investors and fund managers have said that customers have been more patient with certain companies that have a long and strong track record, probably allowing them to survive this month’s deep losses.