Trading & Options · Profile from Trading and Options Research Companion
Melvin Capital
The New York long/short equity hedge fund that Gabe Plotkin, one of Steven Cohen's best-known portfolio managers at SAC Capital, launched in late 2014 with about $200m from Point72 among its first capital, which compounded at roughly 30% a year through 2020 (press, reported), started 2021 with about $12.5bn (Bloomberg, reported) — and then became the most famous loser of the GameStop squeeze. Melvin lost about 53% in January 2021 (WSJ via Benzinga and Wikipedia; Bloomberg via Fortune says 55%, ~$7bn), took $2.75bn from Citadel and its partners (~$2bn) and Point72 ($750m) on 25 Jan 2021 (Shared facts), closed its GameStop short on 26 Jan, ended 2021 down ~39%, lost a further ~21% in Q1 2022, tried and withdrew a plan to restart without its high-water mark, and announced on 18 May 2022 that it would return client money. For a trading book Melvin is the cleanest case of crowding risk on the short side in a retail-flow world: a research-driven short in a stock whose short interest the SEC staff later measured at 122.97% of float became a public target once its positions could be read from SEC filings. Its story turns on survival — the asymmetry of a short position, sized as if the worst case were a bad quarter rather than a coordinated squeeze — and, after the loss, on the fee and trust arithmetic that ends a fund even when its capital survives.
At a glance
- Founded
- Late 2014 (launched December 2014 per Al Jazeera/Bloomberg; "end of 2014" per Fortune/Bloomberg) by Gabriel Plotkin in New York; named after his grandfather, who ran a convenience store (Plotkin's written testimony, 18 Feb 2021; Wikipedia)
- Launch capital
- Nearly $1bn raised (Wikipedia); Point72 put in about $200m at launch (Fortune/Bloomberg, 18 May 2022), a stake reported as grown to ~$1bn by Jan 2021 (Al Jazeera/Bloomberg, 27 Jan 2021) (2014 move)
- Founder
- Gabe Plotkin; Northwestern economics graduate (2001); began at Citadel, then North Sound Capital, then SAC Capital from 2006, where he ran more than $1bn, mostly consumer stocks (Wikipedia; Fortune/Bloomberg)
- Strategy
- Fundamental long/short equity, consumer and technology sectors; "most of our investments are 'long'"; shorts held "for the long term after extensive research" and to protect capital in falling markets (Plotkin's testimony)
- Fees
- 2% management and up to 30% performance (Wikipedia, reported — verify share classes)
- Scale (dated, reported)
- ~$1bn raised (2014); ~$12.5bn at the start of 2021 (Bloomberg); >$8bn at end-Jan 2021 after the injection (WSJ via Benzinga); $8.7bn when the April 2022 plan was floated and $7.8bn at end-April 2022 (Bloomberg via Fortune); 36 employees and "hundreds of investors" (testimony, Feb 2021)
- Signature record (all reported, unaudited — rule 4(c))
- ~30% a year 2015–2020; 2015 +46% or +47% net (Bloomberg ranking; 67% gross also reported); 2017 +41%; 2019 ~+44%; 2020 +51% or +52%; Jan 2021 −53% (−55% per Bloomberg); 2021 −39%; Q1 2022 −21% (−23% through April)
- Ownership / structure
- Private; Melvin Capital Management LP, registered investment adviser (verify Form ADV details); closed to outside capital in mid-2022
- Regulators
- SEC (adviser; 13F filer — its quarterly filings disclosed GameStop puts, from memory, verify); FINRA and NSCC rules governed the brokers whose restrictions followed
- Signature moves (incl. failures)
- Founding after SAC (2014); the record run and 2020 (+~52%); the GameStop short (2014–21); the Citadel/Point72 injection and closing the short (Jan 2021); the House testimony (Feb 2021); the 2021 post-squeeze losses; the high-water-mark plan and closure (2022)
7 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
2014
Founding Melvin After SAC
Founding or fund launch / hiring, spin-out or partner departure
2020
GameStop Short and the Crowded Trade
Large trade or position (failure)
2020
Record Year and Growth to 12 5bn
Capital raise, fee change or return of outside capital (growth of assets on performance)
2021
Citadel Point72 Injection and Closing the Short
Loss, drawdown or blow-up response / capital raise
2021
House Financial Services Testimony
Regulatory, enforcement or legal action (congressional hearing)
2021
Post Squeeze Losses and De Risking
Loss, drawdown or blow-up response (failure) / strategy pivot
2022
High Water Mark Plan and Closure
Capital raise, fee change or return of outside capital / closing a fund or strategy