Hedge fund titans Ken Griffin and Steve Cohen have boosted Gabe Plotkin’s Melvin Capital and injected a total of $ 2.75 billion into the business after losing about 30% this year.
Citadel funds and fixed partners will invest $ 2 billion, while the investment of Point72 Asset Management will amount to $ 750 million, the companies said on Monday. In return, investors will receive a non-controlling interest in the six-year-old hedge fund. According to someone familiar with the plans, Melvin Capital could receive an additional $ 1 billion infusion from other investors on February 1.
The capital inflow comes after Melvin Capital, which started the year with about $ 12.5 billion in assets,’s short bets, including GameStop, go wrong and incite the losses, people familiar with the firm said.
This year’s stumbling block is rare for Mr. Plotkin. His firm has averaged 30% a year since it was started in December 2014, after working for Cohen for almost ten years.
Short sales were a dangerous venture this year. The stocks with the most short-circuits in the Russell 1000 index have risen about 12% so far in January, while the index has risen 2.9% so far this year.
Unlike some executives who have nearly stopped the shortfall in recent years as stocks have continued to rise, Mr. Plotkin continued to place bets on falling stocks. At the end of the third quarter, for example, the firm named 17 proposed listed companies – or bets that prices would fall.
“Gabe Plotkin and his team have delivered outstanding results in the history of Melvin,” Citadel founder Ken Griffin said in a statement. “We have great confidence in Gabe and his team.”
In a statement, Cohen said he has known Plotkin since 2006 and that he is an extraordinary investor and leader.
Mr. Plotkin spent eight years at Cohen’s predecessor, SAC Capital Advisors, and his firm was one of the store’s most successful exhausts. Mr. Cohen previously invested about $ 1 billion in Melvin.
“I’m incredibly proud to work with Ken Griffin and Steve Cohen,” he said. Plotkin said. The team at Melvin are eager to get to work and reward the confidence of these two excellent investment icons.