- Hedge fund Melvin Capital closed out of its public short positions in the first quarter.
- The firm exited its short position on GameStop earlier this year after sparring with day traders.
- Melvin Capital finished the first quarter down 49%, a loss largely pegged to its large short bet against Insider reported previously.
- See more stories on Insiders business page.
Melvin Capital closed out of all its public short positions in the first quarter following a battle earlier this year with GameStop enthusiasts who drove up the share price and caused major losses for short-sellers.
According to a filing submitted to the Securities and Exchange Commission, the New York-based hedge fund exited all of its put options - meaning its bets against certain stocks - in the first three months of the year.
Those short positions included Reddit-driven meme stocks GameStop and AMC Entertainment, along with other lesser-known names like logistics company Cryoport, healthcare company Viatris, and Invesco Solar ETF.
The firm still could have more traditional short positions that dont have to be publicly disclosed, though. Melvin declined to comment to Insider on why it closed out of the put option positions and if it had any other private short positions.
At the beginning of the year, Melvin Capital and other hedge funds found themselves in a losing battle with an army of Reddit day traders who caused GameStop shares to skyrocket, squeezing the firms which had big bets against the gaming retailer. When a stock price goes up, it often causes short sellers to cover their positions by buying back shares at a higher price.
Melvin Capital took a 53% loss because of the craze, and its founder Gabe Plotkin took a $460 million personal loss, Bloomberg reported at the time. By the end of January, analysts estimated GameStop short sellers had lost $19 billion in total.
Melvin Capital closed out of its GameStop short position on January 27, and ended the month with $8 billion in assets under management, compared to the $12.5 billion it started the year with. The firm took another loss in March when it closed out the month with a 7% loss, finishing the quarter down 49%, sources told Insider previously.
Meme stock short sellers continue to be squeezed by day traders. Recently, GameStop and AMC shorts lost nearly $1 billion in just five days of trading, according to ORTEX data, as share prices of the two stocks rallied.
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