A customer of Melvin Capital claims that the company made its investment portfolio massively less risky following the short selling of GameStop shares.
Melvin Capital launched in 2021 with assets of $ 12.5 billion
Small investors from Reddit then made sure that the company lost billions with its GameStop short positions.
According to a report in the Wall Street Journal, the hedge fund had assets of just over $ 8 billion at the end of January . That cash includes a $ 2.75 billion investment by Citadel and Point72 Asset Management earlier this month. This corresponds to a loss of 53 percent, as reported by sources close to the company.
In the report, a client claims that Melvin made its investment portfolio „massively“ less risky following the controversy over short selling GameStop stocks. Those familiar with the hedge fund said Melvin restructured its portfolio to make it easier to get out of stocks. The hedge fund and Citron Capital, another firm involved in the short sales, reportedly closed their positions on GameStop last week .
Many of the key players in GameStop sales have sparked outrage online after Robinhood, a platform with financial ties to Melvin , and other investment platforms restricted trading GameStop stock amid the surge.
The fact that retail investors are denied financial instruments available to large hedge funds has led to allegations of market manipulation
The US Securities and Exchange Commission announced on Friday that it would „closely review measures taken by regulated companies.“ This should be in connection with the situation around Citadel, Melvin, Robinhood and possibly the small investors from the subreddit r / WallStreetBets. In addition, threaten Robin Hood two class actions at the federal level in Illinois and New York.
The price of GameStop shares was $ 325 when the stock market closed on Friday.