L’s Pile on For Melvin Capital in New SEC Investigation
After announcing earlier in May that the hedge fund would officially close its doors, Melvin Capital now gets hit with the SEC investigation into its fund’s “risk management strategy”, or lack thereof; the Wall Street Journal reports.
The SEC is reportedly reaching out to investors in Melvin Capital, specifically inquiring about discussions Gabriel Plotkin (head of the now defunct firm) after they were absolutely upended in the most epic short + gamma squeeze in probably the entire universe.
The easy-money policy days via Father Powell were truly the greatest, I can’t emphasize that enough. Investors and degenerate gamblers alike watched in absolute awe as meme stocks defied all laws of physics and nature by going directly to the moon via forces unbeknownst to man.
In any case, the SEC is now trying to piece together the puzzle of Plotkin’s disclosure to investors specifically related to his risk strategy in his massively exposed short positions, because my dude quite literally got blown the FUCK up. Plotkin also made the promise to investors that their money would be returned…wishful thinking I suppose.
Melvin Capital infamously lost $6.8 Billion in January 2021 amidst the meme stock fiasco. Plotkin found a way to lose money in the fastest and most liquid stock market probably ever. I don’t know how this dude supposedly ran one of the most successful hedge funds on Wall Street, but his reign atop came to an abrupt and painful end. Not only did Melvin suffer insurmountable losses in January of 2021, but in the onset of the growth sell-off earlier this year, which basically every self-proclaimed macroeconomist and neurotypical FinTwit user predicted. Again, how this dude was supposedly the best, I have no idea.
Although it’s been over a year and a half coming, the meme stock frenzy is still very much alive! Bed, Bath, and Beyond stock is trading on literally zero technicals or fundamentals, trading up over 150% over the past month. Not quite like the GameStop and AMC nuclear price action, but I guess you can’t expect that in the more illiquid trading environment. We’ll take anything we can get at this point.
Anyways, F in the chat for the homie (not really) Gabe Plotkin, and RIP to Melvin Capital. Gone, but never forgotten.