Melvin Capital Reveals Negative Bets That MightHave Fueled January Rout

Gabe Plotkin’s Melvin Capital Management late Wednesday delivered new insight into negative places the firm held at year-end that might have contributed to its spectacular 53 percent loss in January.

The steep decline had mostly been attributed to a Reddit-fueled attack on heavily shorted stocks counting GameStop, which beat short sellers similar Melvin plus other hedge fund firms. The blow up caused in Point72 Asset Management plus Citadel pumping $2.75 billion into Melvin’s hedge fund toward shore up its capitals.

In its primary 13F filing covering the fourth quarter plus publicly revealed in mid-February, Melvin had recorded eight stocks for which it held put alternatives. These comprised GameStop, Cryoport, AMC Networks, GSX Techedu, First Majestic Silver, and Simon Property Group, among others.

However on Wednesday, Melvin filed an amended form of the document revealing that as of December 31 it held put positions in an added eight firms not beforehand known.

Gabe Plotkin

Six of those eight businesses’ common stocks swelled in price in January. From January 2 toward January 28, one of the eight stocks Melvin had gambled against closely doubled in price. Two surged about 50 percent over January 27, whereas three others rose as a minimum 20 percent over the similar period.

Just two of the stocks’ values did not move a significant manner.

There is no means of knowing from public papers how long Gabe Plotkin’s Melvin held these preferences positions, whether Melvin augmented or reduced it bets through the month, or if it moreover had outright short positions on any of the stocks.

The common stock of Ligand Pharmaceuticals, Melvin’s second biggest put position amongst this new group, closely doubled for the month over January 28. The stock would increase another 13 percent beforehand peaking on February 9.

Comments are closed.