Hedge fund giants Steve Cohen and Ken Griffin are working together to rescue fellow traders whose positions in runaway stocks like GameStop have been hit.
Griffin’s Citadel and Cohen’s Point72 Asset Management have invested a total of $ 2.75 billion in Melvin Capital Management.
The fund, run by former Lieutenant Gabe Protokin, has fallen by 30 percent, according to The Wall Street Journal.
When individual investors flock to online forums like the Reddit board “wallstreetbets” and use free trading sites like Robin Hood to push each other to invest in cheap stocks in short positions. Relief is done.
GameStop, which Plotkin is betting on, had a short-term interest rate of 102% of the outstanding shares on Friday, making it a major target for sending shares higher in a way called short squeeze.
GameStop’s share price is between Thursday’s closing price and early Monday’s trading as investors tried to squeeze short sellers such as Protokin and Andrew Left, who complained last week that they were threatened by forecasts of falling stock prices. It surged about 178%.
“He was short in a market that no longer allows people to continue to run short,” one hedger complained. “Today you take a position after work, some Reddit guys use their phones to buy penny stock, and you get your face stripped. It’s nuts.”
“I’ve known Gabe Plotkin since 2006. He’s an extraordinary investor and leader,” said Cohen, who adds $ 750 million to his existing investment in the fund. “We are pleased to have the opportunity to invest additional capital and gain a non-dominant revenue share in Melvin Capital.”
Melvin Capital made a 47% profit in 2019 after making a loss in 2018. Approximately one-third of Point72’s 2019 performance comes from its $ 1 billion stake in Melvin.
Griffin and Cohen have been openly competing for talent in the past, and Griffin once hired and even fired Cohen’s brother-in-law in Citadel.
But Protokin-and he wants to recover from the turmoil-seems to have united the two men.
“Gabe Plotkin and the team have had extraordinary results throughout Melvin’s history,” Griffin said in a statement to the post after confirming that Citadel and his partners would invest $ 2 billion in Melvin’s books. I did. “We are very confident in Gabe and his team.”
“If Ken Griffin donates $ 2 billion to Gave Protokin, he’s not doing it to be a good person,” said another hedge fund manager. “He clearly thinks Protokin will bounce.”
This short seller received a $ 2.75 billion bailout
Source link This short seller received a $ 2.75 billion bailout