Melvin Capital began 2021 with $ 12.5 billion in assets before Reddit retail investors caused the company to lose billions on its GameStop short positions.
According to a Wall Street Journal report, the hedge fund has just over $ 8 billion in assets at the end of January includes a $ 2.75 billion investment from Citadel and Point72 Asset Management earlier this month. According to people familiar with the company, this is a 53% loss.
In the report, a client claims that Melvin has “massively scaled down” his investment portfolio following the controversy surrounding the short selling of GameStop stocks. People familiar with the hedge fund said Melvin has restructured its portfolio to improve its ability to exit securities with ease. The hedge firm, as well as Citron Capital – another company involved in the shorts – reportedly Closed their positions at GameStop last week.
Many of the big players involved in the GameStop short squeeze are facing outrage online after Robinhood – a platform with financial ties to Melvin – and other investment tools constrained GameStop stock trading in the midst of a price surge. Retail investors seemingly cut off from financial instruments offered to major hedge funds led to allegations of market manipulation.
The United States Securities and Exchange Commission announced on Friday that it would be ‘narrow’ [reviewing] actions taken by regulated entities ”, ostensibly in connection with the situation surrounding Citadel, Melvin, Robinhood and possibly the private investors of the r / WallStreetBets subreddit. In addition, Robinhood faced two class action lawsuits in federal courts in Illinois and New York.
GameStop stock was priced at $ 325 when the markets closed on Friday, after a 67% rise in the past 24 hours.