Hedge fund shorts, such as the faltering video game store, have taken significant losses from retail investors. Shares of GameStop rose 400 percent last week, extending its year-to-date return to 1,625 percent. Shares closed at $325 on Friday afternoon. Until October, it was trading at less than $10 per share.
Three Billion Dollars was Invested
Close to three billion dollars was invested into the fund by Citadel and Point72 to strengthen its financial position. According to a source familiar with the fund’s performance, Point72 fell 10% in January. Point72 refused to respond to questions.
According to a person familiar with Citadel’s performance, the fund lost 3% in January. Citadel has declined to respond. According to the source, the hedge fund’s Melvin investment, which it made last week, was down 1%.
Since the beginning of the year, Melvin’s total assets under management have decreased from around $12.5 billion to more than $8 billion, including the emergency cash that was promised by certain current investors at the end of the month.
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Since the fund’s establishment in 2014, the source claims that the fund’s liquidity is robust and its use of leverage is at its lowest level.
Melvin’s January Losses were First Revealed by the Wall Street Journal.
Reddit’s WallStreetBets forum has become a popular place for ordinary investors to discuss various trades in the wake of last week’s activity in GameStop. In the span of a week, the number of members on the forum has more than tripled.
For those who couldn’t trade at will during the short squeeze, Robinhood and other brokerages restricted trading in some of the more volatile names.
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An increase in deposit requirements of tenfold was ordered by the central Wall Street clearinghouse this week to enable smooth settlement of deals involving assets suffering exceptional volatility, according to Robinhood’s blog post.
Shares of GameStop have soared at an astronomical rate, prompting some lawmakers to urge for regulatory intervention.
