Melvin Capital Lost 53% in January Amid GameStop (GME) Short Bet Gone Wrong - WSJ

Losses at embattled hedge fund Melvin Capital totaled 53% in January due to a short-bet-gone-wrong in GameStop (NYSE: GME) and other stocks, the Wall Street Journal reported citing people familiar with the matter.

The firm founded by Gabe Plotkin started the year with about $12.5 billion and now runs more than $8 billion, the Journal reported.

Melvin Capital received a $2.75 billion emergency investment from Citadel and Point72 on January 25th as losses mounted in its short bet against surging video game retailer GameStop (NYSE: GME). Citadel and Point72 took a non-controlling revenue share in Melvin amid the investment.

Shares of GameStop have surged 1625% year-to-date as traders from Reddit forum Wallstreetbets and other retail investors bought shares no matter the fundamentals, which are considered lousy by traditional measures.

Melvin has since covered the short position in GameStop and the fund has massively de-risked its portfolio, a client told the Journal.

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