Melvin Capital rated “The Worst Performing” hedge fund of 2021

Melvin Capital has been rated by Bloomberg as the “The Worst Performing” hedge fund of 2021 after reporting a staggering loss of 41%. Melvin Capital was at the center of the GameStop frenzy that led to SEC probes and Congressional hearings.

2021 was already challenging for hedge funds, as stocks traded in the green following a worldwide effort on Covid vaccinations. But for Melvin Capital, it was a completely different story – all because of their puts on GameStop and AMC. Reddit traders had forced them to close their short positions at a loss of 55% in January. The result was billions of dollars worth of losses for its boss Mr. Gabe Plotkin and his investors in a matter of days. Citadel and Plotkin’s old boss Steve Cohen came to the rescue infusing massive capital funds to keep the company afloat. The loss was so bad; the company was days away from filing bankruptcy.

The company has been battling out fires since February 2021, and their losses kept mounting – ending up at 41% through November.

In August, Ken Griffin’s Citadel LLC and Citadel partners planned to redeem roughly $500 million of the $2 billion they put in Melvin Capital Management. In return for the rare intra-month investments, the two firms received non-controlling revenue shares in Melvin for three years, and Citadel would keep its revenue share.

Melvin has produced a 25% return from February 1st through the end of July, making it one of the top-performing hedge funds for the period. But its losses in the immediate wake of Citadel’s and Point72’s investments cut significantly into those funds’ gains on their January wagers on Melvin. Mr. Plotkin has told people he didn’t necessarily expect Citadel to keep its entire investment in Melvin long term.

Recently Melvin Capital had upped its stake in Coty two-fold, bringing its total share to 5 percent, according to a report published by Bloomberg. Melvin’s stake now stands at 21.7 million common shares, plus options to acquire an additional 19.5 million. Melvin held some 10 million shares at the close of June this year.