Melvin Capital Decides To Return Capital After Deep Losses

Only a few weeks after news leaked that Melvin Capital was looking to restructure its funds, the struggling firm has announced that it would be winding down after a string of severe losses.

According to the letter seen by the Financial Times and Bloomberg, Gabe Plotkin, the New York-based hedge fund’s founder, told clients that he is planning to return cash to investors after a difficult stretch.

At the beginning of 2021, the hedge fund came under attack from retail investors, who swarmed on its most prominent short positions in an attempt to inflict crippling losses on the firm. The attack worked. At one point the fund was losing as much as $1 billion a day as short positions moved against it.