Citadel Is Further Paring Back $2 Billion Melvin Investment via /r/wallstreetbets #stocks #wallstreetbets #investing


Citadel Is Further Paring Back $2 Billion Melvin Investment

Citadel LLC is fur­ther par­ing back its $2 bil­lion in­vest­ment in Melvin Cap­i­tal Man­age­ment af­ter the hedge fund stum­bled in its ef­fort to re­cover from a near col­lapse trig­gered by surges in Game­Stop Corp. and other “meme stocks” early last year.

Citadel in late Jan­uary asked to re­deem half the money the firm and its part­ners have left in Melvin’s hedge fund, af­ter orig­i­nally halv­ing their in­vest­ment late last year, as Melvin racked up dou­ble-digit losses for the sec­ond Jan­uary in a row, peo­ple fa­mil­iar with the mat­ter said. The lat­est re­demp­tion re­quest would be paid out at the end of March, the peo­ple said.

Citadel and its part­ners in­vested $2 bil­lion in Jan­uary 2021, along­side a $750 mil­lion in­flux from Steven A. Co­hen’s Point72 As­set Man­age­ment, in ex­change for a share of Melvin’s fees over the next three years. The rare in­tra-month in­vest­ment, made as the $12.5 bil­lion hedge fund was suf­fer­ing mount­ing losses from the fe­ro­cious meme-stock rally, en­abled Melvin to re­duce its lever­age and avoid be­ing a forced seller.

Founded by Gabe Plotkin, a for­mer star port­fo­lio man­ager for Mr. Co­hen, Melvin was one of the top hedge funds on Wall Street when it lost about $6.8 bil­lion—more than half its as­sets—in Jan­uary 2021 as in­di­vid­ual in­vestors banded to­gether to tar­get the firm and bets it had made against Game­Stop and other com­pa­nies Strat­egy changes helped the fund claw back some of those losses in the re­main­der of last year, but Melvin lost 15% this Jan­uary as tech­nol­ogy and other fast-grow­ing com­pa­nies it had bet on sold off.

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Submitted February 24, 2022 at 08:33PM by its_me_cindy
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