Melvin Capital fund reportedly gains 20% in February By Investing.com

By Samuel Indyk

Investing.com – Melvin Capital, one of the hedge funds at the heart of the GameStop (NYSE:GME) affair, reportedly gained more than 20% in February in a rapid turnaround from the losses seen the month before.

The hedge fund, which had a large short position in GameStop before the January surge in share price, had lost 53% in January during the squeeze that sent GameStop’s shares from a low of $17.25 at the start of the year to a high of $481.99 on January 28th.

GameStop

The firm had been short GameStop but closed out its short as the stock climbed, taking huge losses on its position. The squeeze emerged as a large group of traders on the WallStreetBets subreddit prompted a large increase in buying which in turn forced short sellers to buy to cover their positions.

Amid the rout, Melvin Capital received an injection of capital from Citadel and Point72 Asset Management. The total capital invested was around $3bln.

House Testimony

Following the GameStop affair, Melvin Capital’s founder Gabe Plotkin was called to testify in front of the House Financial Services Committee. In front of the Committee, Plotkin said his company was rethinking its short selling approach after the ordeal. And on the latest evidence with February’s performance, Plotkin has done just that.