The head of the hedge fund in the midst of the GameStop frenzy last month, says Redditors targeted him with anti-Semitic insults and text messages.
Melvin Capital founder Gabe Plotkin made the disturbing allegation in prepared testimony he plans to give during Thursday’s hearing on the House Finance Committee on the recent populist revolution in the stock market.
Melvin became a major target on Reddit’s WallStreetBets forum because he took a short position in GameStop, which means he struggled to drop the struggling share price for video games.
While Reddit users encouraged each other to “trade in the opposite direction” of Melvin’s investments, they also personally targeted Plotkin, he said.
“Many of these posts were lined with anti-Semitic insults aimed at me and others,” Plotkin said in his testimony. ‘The messages say things like’ it’s very clear we need a second holocaust. The Jews cannot get away with this. ‘Others sent me equally bad and racist text messages. ”
WallStreetBets has a reputation for being dirty and scratchy. Its users often refer to each other as ‘delayed’ – an offensive barrier for people with intellectual disabilities – and Keith Gill, the Redditor attributed to the spearhead of the GameStop rally, is called ‘DeepF – ingValue’ on the forum .
But Reddit CEO Steve Huffman defended WallStreetBets in his prepared testimony, saying the 9.1 million member message board is an online community with ‘significant depth’.
“WallStreetBets may look sophisticated or chaotic from the outside, but the fact that we are here today means that they have succeeded in raising important issues of fairness and opportunity in our financial system,” Huffman said.
Plotkin’s testimony also explained how the unprecedented rise in GameStop’s share price affected him both professionally and personally.
Melvin Capital – which named Plotkin after his grandfather – closed its short position in GameStop with a loss in the last week of January, as the company’s share price rose to a high of $ 483 per share.
Melvin has held the position since its inception six years ago because the fund believes that GameStop’s business model of selling video games in brick-and-mortar stores is “being overtaken by digital downloads via the Internet,” Plotkin said.
Melvin dropped the commitment “not because our investment thesis changed, but because something unprecedented was happening,” Plotkin said. “We also reduced many other Melvin positions with significant losses – both long and short – that were similar positions.”
Despite the unrest, Plotkin insisted that the $ 2.75 billion investment that Melvin received from Ken Griffin’s Citadel and Steve Cohen’s Point72 at the end of January was not intended to save the fund, as he losses struggled.
“To be sure, Melvin went through a difficult time, but we always had a margin surplus, and we did not want a cash infusion,” he said.