Name: Melvin Capital, hedge fund that bet against GameStop, lost more than 50% in January
Brand: cnbc.com
SKU: cnbc-com-32
Availability: OnlineOnly

critic

Melvin Capital, hedge fund that bet against GameStop, lost more than 50% in January

preview

Key PointsHedge fund Melvin Capital Management lost 53% in January amid a in and other stocks the fund was betting against, a source familiar with the matter told CNBC.The heavy losses come as retail investors piled into popular hedge fund short targets, including the struggling video game retailer. Shares of GameStop finished last week with a , bringing its total return this year to 1,625%. The stock closed Friday's session at $325. As recently as October it traded under $10. CNBC's Andrew Ross Sorkin reported last week that Melvin Capital closed out its short position in GameStop on Tuesday afternoon .Citadel and Point72 infused into the fund to shore up its finances. Point72 slid 10% in January, according to a source with knowledge of the fund's returns. Point72 declined to comment.Citadel lost 3% in January, according to a source with knowledge of the fund's returns. Citadel declined to comment. The source said the hedge fund was down 1% on its Melvin investment, which it made last week.Melvin's assets under management now stand at more than $8 billion — including the emergency funding — down from roughly $12.5 billion at the beginning of the year, after certain current investors committed additional capital at the end of the month.The fund's liquidity is strong and its use of leverage is at the lowest level since the fund's inception in 2014, according to the source. first reported Melvin's January losses.Last week's activity in GameStop extended to other popular short targets, including Bed Bath &amp; Beyond and AMC Entertainment, with retail investors turning to Reddit's WallStreetBets forum to discuss various trades. The forum has seen its members more than triple in just a week to north of 7 million.Amid the short squeeze, Robinhood and other brokerages restricted trading in some of the most volatile names, sparking frustration for users who were unable to trade at will.Robinhood said in a blog post that the central Wall Street clearinghouse mandated a tenfold increase in the firm's deposit requirements on the week in order to ensure smooth settlement in trades involving the securities experiencing unprecedented volatility.The meteoric rise in GameStop's shares has prompted some lawmakers to call on regulatory bodies to intervene."We need an SEC that has clear rules about market manipulation and then has the backbone to get in and enforce those rules," Sen. Elizabeth Warren, D-Mass., told CNBC Wednesday. "To have a healthy stock market, you've got to have a cop on the beat."&nbsp;to access our live Pro Talk "How to Navigate the Reddit Market Mania" with Fundstrat's Tom Lee.- CNBC's Patti Domm contributed reporting.

Key PointsHedge fund Melvin Capital Management lost 53% in January amid a in and other stocks the fund was betting against, a source familiar with the matter told CNBC.The heavy losses come as retail investors piled into popular hedge fund short targets, including the struggling video game retailer. Shares of GameStop finished last week with a , bringing its total return this year to 1,625%. The stock closed Friday's session at $325. As recently as October it traded under $10. CNBC's Andrew Ross Sorkin reported last week that Melvin Capital closed out its short position in GameStop on...

public

Leslie Picker

Pippa Stevens

cnbc.com

Credible

Speculation

Anecdotal Evidence

Generalization

Stacking the Deck

Appeal to Authority

Straw Man

Slippery Slope

Emotional Appeal

Red Herring

False Dilemma

Illogical

Moral Equivalency

Ad Hominem

Correlation w/o Causation

Semantics

Begging the Question

Faulty Analogy

Non Sequitur

Bandwagon

Dogmatism

Failing Occam's Razor

Biased

Pure Opinion

Hit Piece

Racial Bias

National Bias

Religious Bias

Financial Incentive

Political Agenda

Gender Bias

Misused Image/Video

Study Misinterpreted

Mistake

Misused Term

Science Misrepresented

Factual Error

Satire

Surface Level

Lack of Reliable Sources

Sensational

Not Credible

Investigative

Balanced

Well Sourced

Great Context

sports

entertainment

U.S.

international

business

technology

science

culture

politics

media

health

Melvin Capital, hedge fund that bet against GameStop, lost more than 50% in January

No article scores yet.

CRITIC REVIEWS

PUBLIC REVIEWS