Melvin Capital to close funds following challenging 17 months – WSJ

Gabe Plotkin's Melvin Capital Management LP will be winding down its funds and returning cash to its investors after a tumultuous 17 months since it suffered big losses in early 2021 from short bets on GameStop Corp., The Wall Street Journal reported, citing a letter to investors.

Several investors said they were surprised by the hedge fund's decision, the publication reported. As recently as the week of May 9, Melvin Capital executives had been consulting with clients on new fee arrangements, people familiar with the firm said.

Both Citadel LLC and Point72 Asset Management LP, which injected billions despite the firm's losses during the GameStop saga, eventually decided to pull out their respective investments. Melvin Capital in April also reportedly planned to shrink its assets to $5 billion from the $8.7 billion it managed at the end of March.

Plotkin said in the letter that he had done everything he could, but it had "not been enough" to meet customers' expected returns. He added that he expects to return almost all of his clients' money by late July.