- Steve Cohen’s Point72 and Ken Griffin Citadel are investing $ 2.75 billion in Melvin Capital.
- Melvin is down nearly 30% this year as its short positions take a big hit.
- Day traders have bid on GameStop, Bed Bath & Beyond stock prices and other popular shorts.
- Visit Business Insider’s homepage for more stories.
A pair of billionaire investors is swooping in to support a short-selling hedge fund in its battle against an army of day traders.
Hedge funds said on Monday that Steve Cohen Point 72, Ken Griffin Castle and other partners are spending a total of $ 2.75 billion in Melvin Capital. They will receive non-controlling revenue shares in two files for their money.
Melvin will welcome the cash injection because the agonizing short bets have left it down 30% year-to-date starting Friday, The Wall Street Journal reported.
Dozens of individual investors, Including some members of the Reddit forum r / wallstreetbets Targeting short stocks the most In recent weeks. They drove GameStop’s stock price Up to 145% On Monday, Bed Bath & Beyond was up 58%, BlackBerry was up 48%, and AMC was up 39%.
Melvin is taking more negative trades than most of his Wall Street rivals, exposing him to potentially huge losses. It owned “puts” – betting that the share price would go down – on 17 US listed companies including GameStop and Bed Bath & Beyond at the end of September.
The company’s strategy has paid off in the past. Melvin has returned at a rate of 30% annually since its founding in 2014, and its assets under management have grown to $ 12.5 billion at the start of this year.
Gabe Plotkin, a former star portfolio manager at Cohen’s SAC Capital, resigned to start Melvin in 2014. Cohen has been seen as supportive of Day 1.
Профессиональный решатель проблем. Тонко обаятельный любитель бекона. Геймер. Заядлый ботаник. Музыкальный новатор