Melvin Capital, the once high-flying hedge fund, plans to close its funds and return the cash to its investors.
Melvin Capital plans to close its funds and return the cash to its investors, capping a stunning reversal for a firm that lost big on the surge in meme stocks in the early days of the pandemic.
In a letter to investors that was reviewed by The Wall Street Journal, Gabe Plotkin, Melvin’s founder, disclosed the winding down of the funds, saying, “The past 17 months has been an incredibly trying time.”Its executives as recently as last week had been soliciting clients for their thoughts on what new fee arrangements seemed fair to them and to Melvin going forward.
While Melvin made up some of its huge January 2021 losses from the rally in GameStop Corp. GME, -8.87% and other so-called meme stocks, its focus on fast-growing companies dealt it further setbacks this year as investors soured on such stocks and its losses widened. This year through April, Melvin had lost 23%. Since its start, it has averaged an 11.9% return.This could be a lost decade for stocks.
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