‘51% to go’: Reddit crowd rejoices at report that Melvin Capital rang up a 49% first-quarter loss

Melvin Capital has been at the center of a closely watched fracas between the professional investors and amateur traders congregating on social-media forums like Reddit’s r/WallStreetBets.

The hedge fund, run by Gabe Plotkin, a former investment manager for hedge-fund titan Steve Cohen, has borne the brunt of losses from a surge in heavily shorted “meme” stocks like videogame retailer GameStop GME, -6.99% and movie chain AMC Entertainment Holdings AMC, -3.78%, and it seems as if Melvin’s short-squeeze wounds aren’t mending, perhaps to the chagrin of Plotkin and the delight of the army of amateur investors who are determined to collectively stick it to the pros.

“51% to go!” posted one user on r/WallStreetBets in response to Melvin’s reported losses.

A spokesperson for Melvin Capital declined to comment on the Bloomberg report to MarketWatch. However, a person familiar with Melvin’s performance confirmed the magnitude of the quarterly loss.

The reports of deepening pain for Plotkin come after his fund plummeted 53% in January thanks to an unprecedented short squeeze engineered by the retail traders who were seen targeting the fund using social media like Reddit and Discord and no-fee trading platforms like Robinhood to drive up share values in GameStop and AMC.

Still, Plotkin managed to return 22% to investors in February but Bloomberg reported that the fund delivered a 7% decline last month. 

Melvin Capital was seen holding a massive short position in GameStop that helped to catalyze the retail crowd’s initial strategy. Some Redditors accuse hedge-fund investors like Plotkin and Co., of enjoying the benefits of financial markets that some view as rigged.

Melvin’s loss is being hailed by others as “the ultimate loss porn,” on a number of threads, with “loss porn” representing the Reddit crowd’s way of describing schadenfreude.

Some users on Reddit speculated, without evidence, about the possibility that Melvin was still ensnared in the GameStop short squeeze. However, recent reports suggest that that is unlikely.

A fund spokesman stated has stated that Plotkin covered his GameStop short on Jan 26, a day after the fund received a much-needed $3 billion infusion from Plotkin’s mentor, Point72’s Steve Cohen, and his former boss, Citadel’s Ken Griffin.

Shares of GameStop closed down 7% Friday and booked a more than 17% loss. However, shares of the videogame retailer are up over 740% in the year to date. By comparison, the Dow Jones Industrial Average DJIA, +0.89% has gained over 10% so far in 2021, the S&P 500 index SPX, +0.77% has also gained almost that much, and bitcoin prices BTCUSD, -0.70% are up over 100% over the same period.

Still, the retail crew appeared content to bask in the glow of the hedge-fund investor’s anguish, with one musing that investing in Melvin “seems like a great way to turn a million dollars into hundreds of thousands of dollars.”