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Thread: Hedge Fund Melvin Lost 6.8 Billion in a Month

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    Default Hedge Fund Melvin Lost 6.8 Billion in a Month

    Hedge Fund Melvin Lost $6.8 Billion in a Month. Winning It Back Is Taking a Lot Longer.
    Founder Gabe Plotkin’s bets against GameStop and other stocks backfired; the rocky road back has been marred by fresh losses this year

    Gabe Plotkin wasn’t sleeping. His bets against meme stocks such as GameStop Corp. were backfiring, and losses at his $12.5 billion hedge fund were mounting. Strangers angry about his wagers were bombarding him with threatening messages and texts.

    At the worst point in January 2021, Melvin Capital Management was losing more than $1 billion a day as individual investors on online forums such as Reddit banded together to push up prices of stocks Melvin was betting against. “We were in a terrible position. Stared death in the face,” Mr. Plotkin told employees in a Zoom meeting late that month. “But we’ve made it through.”
    https://www.wsj.com/articles/melvin-...hare_permalink
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.


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  3. #2

    Join Date
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    Default Re: Hedge Fund Melvin Lost 6.8 Billion in a Month

    Two thoughts:
    1. It couldn't happen to a nicer bunch of chaps
    2. and, <sarcasm>they obviously need a little public assistance</sarcasm>
    Lookin' up at the 'G Fund'!!!

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  5. #3

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    Default Re: Hedge Fund Melvin Lost 6.8 Billion in a Month

    I wonder how they expect to make that money back? That's a huge hole to dig out of, but not the first time a hedge fund has blown up.

    If Mudrick would have kept his mouth shut about the short campaign, his fund probably never would have been squeezed so hard and this story never would have happened. The decision to openly flaunt his position on social media aggravated a lot of people who were already angry. This was a big reason why the whole thing happened. Forum users believed they were "sticking it to the man", and what better target than a billionaire talking negative about a zombie company that hundreds of thousands thought was the ticket to paradise.

    Sometimes those short campaigns work out, but a lot of times they do not, but you don't see them marketed as prominently online as you once did. Nowadays, it's mostly penny Chinese stocks nobody cares about anyway.

    The irony in this story is the amount of profits this brought to trading desks that made markets. They were the winners. The losers in this story are the ones who are still holding on, and have significant amounts of money tied up in AMC and GME thinking there will be some kind of turnaround that tests the all-time high.

    There is a "where are they now", article in today's WSJ where one person said he lost it all, one has significant money in GME (sounds like underwater or breakeven) and hopes to pay off student loans and buy a house with the stock, and another couple that owns 198 shares and "feels good about the company".

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