Melvin Capital Shakes Off Gamestop Losses in Febraury

Melvin Capital Management, the hedge fund famous for being at the centre of the Gamestop short squeeze has gained over 20 percent in February, outperforming the S&P 500 to recover some of its losses from a terrible January. 

Founder Gabe Plotkin spent the first half of January defending his hedge fund’s portfolio from a Reddit mob, the second half trying to convince investors he can survive a 53 percent loss, and early February explaining to Congress what happened.

READ MORE: Gamestop Shares On A Big Winning Streak

Now the hedge fund is trying to climb out of the hole retail investors threw it into, which cost his investors – including billionaire Steve Cohen, Brown University, and the Robin Hood Foundation – more than $6 billion.

Melvin Capital Management received new investments in its fund during the turmoil, with Citadel and Steve Cohen’s Point72 injecting $3 billion. Plotkin said in his testimony to the House Committee on Financial Services last month that Griffin had reached out to him, and that the cash injection was not an emergency bailout. 

Plotkin's hedge fund, like many others, will go short against a company. Short selling is a strategy in which investors borrow shares of a stock at a certain price in hopes that the market value will fall below that level when it’s time to pay for the borrowed shares.

However, despite the February rebound, the hedge fund will still need to produce an additional 75% gain for earlier clients before they break even.