Melvin Capital Management LP, a short seller for GameStop Corp. (NYSE: GME), lost 46 percent in the first half of 2021, according to Bloomberg, citing people familiar with the situation.
What happened was this: Melvin Capital was at the center of the GameStop saga earlier this year, having been founded in 2014 by Gabe Plotkin, a former portfolio manager for Steve Cohen.
According to the report, the hedge fund, which had $11 billion in assets as of June 1, is taking smaller-sized investments to limit exposure to specific businesses.
Plotkin reportedly told his data scientists to keep an eye on social media and discussion boards for stocks with a lot of support from individual investors.
Also see: Shorts, Options, and AMC Tricks Traders Participate in the Game
Why Does It Matter? Melvin Capital’s first-half results show that the hedge fund is still reeling from losses on bets against GameStop and other stonks, which are popular among retail investors.
In May, Melvin Capital announced that it has closed out all of its public negative bets for the first quarter. This included GameStop’s disclosed put options.
White Square Capital, based in London, announced its closure in June after suffering massive losses during the retail trading craze earlier in the year. Following the spike in shares of stonks, this was one of the first hedge fund closures.
Short-seller losses at AMC Entertainment Holdings Inc. (NYSE: AMC) and GameStop reached $12 billion year-to-date in early June. Both stocks continue to get a lot of attention from retail investors.
Price Changes: In Thursday’s normal trading session, AMC Entertainment shares closed over 6.4 percent higher at $47.94, while GameStop shares closed roughly 0.4 percent higher at $191.38.
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