Hedge fund giants Steve Cohen and Ken Griffin are joining forces to rescue a fellow trader whose positions are affected by wild stocks like GameStop.
Griffin’s Citadel and Point72 Asset Management are jointly investing $ 2.75 billion in Melvin Capital Management, whose recent bets on stock drops have been frustrated by a small army of rich-quick dreams.
The Wall Street Journal reported that the fund, which is managed by former Cohen Lieutenant Gabi Plotkin, is down 30 percent.
The bailout comes as retail investors are flocking to online forums such as the Reddit board “wallstreetbets” To push each other To invest in cheap stocks with short positions against them using fee-free trading sites like Robinhood.
GameStop, which Plotkin is betting on, has a short interest of 102 percent of its outstanding shares on Friday, making it a prime target to send a higher stock through what’s known as a short squeeze.
Shares on GameStop rose nearly 178 percent between Thursday’s close and the start of trading Monday as investors sought to put pressure on short sellers such as Plotkin and Andrew Left, who complained last week. To threaten On his expectations of a decline in the stock.
“He was short in a market that no longer allowed people to stay short,” one of Hedji’s managers complained. “Today, you take a stand after the work is done, then some people on Reddit use their phones to buy a few penny stocks and you end up with your face torn. It’s a nut.”
“I know Gabe Plotkin since 2006 and he’s an exceptional investor and leader,” said Cohen, who will add $ 750 million to his current investment in the fund. “We are delighted to have the opportunity to invest additional capital and acquire a non-controlling revenue share in Melvin Capital.”
Melvin Capital saw a 47 percent gain in 2019 after losing money in 2018. Point72’s performance in 2019 was one-third of its $ 1 billion stake in Melvin.
Griffin and Cohen have publicly competed for commercial talent in the past, even as Griffin once hired – and then fired – Cohen’s son-in-law in the Citadel.
But Plotkin – and he hopes to recover from the chaos – appears to have united the two men.
“Gabe Plotkin and his team have achieved extraordinary results over Melvin’s history,” Griffin said in a statement to The Post after confirming that Citadel and its partners will pump $ 2 billion into Melvin’s books. “We have a lot of confidence in Gabi and his team.”
Another hedge fund manager said, “If Ken Griffin gives $ 2 billion to Gabe Plotkin, he’s not doing it to be a nice guy.” “He clearly thinks Plotkin will be back.”