US Hedge Funds Suffer As Mimic Stocks Rise Again

Melvin Capital and Light Street Capital, two United States hedge fundHard hit by a rally in popular stocks among retail investors in January, it took further losses in May as M shares surged again.

Melvin Highest level of victims From its first rally in Mimi’s stock in January, it lost another 4 percent in May, people familiar with the numbers said.

This brings the fund’s losses this year to about 44.7 percent, people said. The Standard & Poor’s 500 index of US stocks rose 0.6 percent last month and rose about 12 percent in the first five months of the year.

Hedge fund losses just from betting on five popular stocks — GameStop, Bed Bath & Beyond, AMC, BlackBerry and Clover Health — total losses of nearly $6 billion since the beginning of May, according to data firm Ortex Analytics. Peter Hellerberg, co-founder of Ortex, said funds had recently reduced their short positions in MIM stocks, but that short interest remained “at very high levels.”

New York-based Melvin, run by Gabi Plotkin’s stepson, Steve Cohen, found herself at the center of the GameStop saga in January. Melvin’s performance fell 53 percent amid a sharp rise in the stock price.

The fund, which in January suffered a $4.5 billion decline in the value of its assets from the end of last year, received an amount $2.75 billion investment Shortly thereafter from Cohen’s Point72 Asset Management and Ken Griffin Citadel.

Since then, Melvin’s assets have risen to $11 billion as of June 1, according to a person familiar with the company. After revealing the scale of the company’s losses, Melvin said it actually happened I got out of my bet vs GameStop and reduce the risk in its investments – despite it suffered more losses last month.

Stocks like GameStop, AMC and BlackBerry surged in late January, as amateur investors coordinated their actions on forums like Reddit, in some cases targeting hedge funds directly.

After pulling back, these stocks have risen strongly again in recent weeks. The rallies hurt both short sellers betting directly on stocks, as well as managers with short positions in other stocks that were hurt in the ensuing market volatility or when other short sellers ditched their bets.

Others who lost their money include Light Street Capital, set up by Glen Kacher, a so-called Tiger Cub who previously worked at Julian Robertson’s Tiger Management.

The company, which was managing assets of about $3.3 billion at the beginning of this year, took a hit during the first quarter. Its main fund lost another 3 percent in May and is now down 20.1 percent this year, according to figures sent to investors. A person familiar with the fund’s positions said the fund’s losses in the first quarter were mostly driven by short selling losses.

Melvin State Street declined to comment.

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