When Melvin Capital Management got slammed by bad short bets in the GameStop meme-stock misadventure in January, Citadel LLC and its partners stepped in with $2 billion. Now, according to a recent Wall Street Journal article, they are planning to redeem roughly $500 million of that investment.
One of the top-performing hedge funds in recent years, Melvin lost more than $6 billion in just a few weeks. On January 25th Citadel and Point72 Asset Management invested $2.75 billion and received non-controlling revenue shares for 3 years in return. While Citadel has a history of swooping into distressed funds, it’s rarely made such a sizable investment.
Since Feb 1 through July 31, Melvin has produced a 25% return, but still remains about 43% down for the year. Point72 is maintaining its investment in Melvin, according to a person familiar with the investment, says the article. Melvin’s founder Gabe Plotkin has said that he didn’t expect Citadel to keep its investment long term, but people familiar with the matter said Citadel will keep its revenue share.
In recent months, Melvin has raised roughly $1 billion, brought its assets under management to more than $11 billion, and made new hires. It’s also opened an additional office in Miami Beach: moves designed to bring in new money and generate investment and management fees, which for Melvin are some of the highest in the industry.
Invest Using Proven Quantitative Strategies – Risk-Free Trial.
Get a free systematic investing guide, which explains how systematic investing works.
View the highest quality growth stocks in the large cap segment of the market.