In hindsight and despite our intentions, we recognize now that we focused on future returns and team continuity without sufficient consideration of your investment losses.”Ĭitadel CEO Ken Griffin later criticized the meme stock traders who pulled off the mammoth short squeeze. Plotkin, who’d been a superstar in the hedge fund world-posting returns of around 30% annually for six years with the help of bearish wagers-stepped away from managing external capital and wrote to investors: “I apologize. It also showed just how powerful retail investors had become. The saga sparked a House committee hearing in February 2021, with many lawmakers worried about the ability of social media chatter to cause real-world problems. Melvin Capital eventually announced that its fund would close in June 2022. Fellow hedge funds Point72 and Citadel made cash investments in Melvin Capital during the so-called short squeeze, but a little over a year later they pulled their investments. In January 2021 alone, Melvin Capital lost about $6.8 billion, suffering one of the fastest declines for a hedge fund since the 2008 financial crisis. The army of traders also bought up other stocks the hedge fund had shorted. Plotkin’s Melvin Capital Management had shorted, or bet against, the video game retailer. In 2021, retail traders communicating in online forums like Reddit, in particular the page r/WallStreetBets, banded together to drive up shares of GameStop, often trading on the commission-free brokerage platform Robinhood.
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