Gabriel Plotkin Aka Gabe Plotkin is the founder of an American Investment Firm, Melvin Capital LP founded in the year 2014. After passing out with a degree in economics, he joined few hedge fund firms and worked for a while, before joining SAC Capital as a trader. He was a trader at SAC Capital, responsible for managing portfolios of several clients. He was managing consumer stocks mostly.
Plans to leave SAC Capital:
- Before, starting his investment firm, Plotkin was in the position of Chief Portfolio Manager with SAC Capital.
- There are was a scandal row during that time, which involved his name as well. He was said to be the email recipient of insider information, which is considered to be a criminal offense in trading. However, he was not proved to be guilty.
- Later he came out of the, then SAC Capital, now Point72 firm, and owned Melvin Capital LP, the hedge fund investment firm.
Relationship between him and Cohen:
- Point72’s Cohen, invested some of his money into Melvin Capital when he founded the firm. That showed how much Cohen valued, his work when he was with his firm.
The initial success of Melvin Capital:
- He named his investment firm after the name of his grandfather, who was a small businessman. It is said that he raised nearly a billion-dollar fund. He focused mostly on the short sellings.
- In the first year of operations, the firm showed up good returns and was listed as the top-performing hedge fund firm.
- That profit continued at a decent percentage until their recent loss.
Fallout
- Melvin Capital suffered a loss of nearly 30%, because of their short bets on GameStop. This was because the users of Reddit and WallstreetBets groups floated a discussion about the future of GameStop.
- This helped the share price to shoot up, by the end of the year 2020. The already down-performing Gamestop started to find a recovery path, that was observed by all the hedge funds.
- The member of the WallStreetBet planned for a short squeeze, that would result in a loss to the hedge funds. This heaped the loss.
- The short position followed by Melvin Capital and the other firms made GameStop stock the most shorted equity.
- The popular trading app stopped the purchase of GameStop shares in its application, which resulted in the falling of its share price.
- After this, there were several rumors that Melvin Company would file for bankruptcy. The exact amount that was lost in the deal was disclosed. However, the firm said that its portfolios have been repositioned. By the end of January this year, the firm was down by 53%.
- Though the firm showed gains, in the later months, they still need to show 75% of gains, for their clients., before they share it even.
Conclusion:
Hope the above information gives you a brief of Gabe Plotkin and his investment firm.
