Investing.com - Despite the unfavorable conditions in January for the Melvin Capital Hedge Foundation, which was in the center of the scandalous stir around Gamestop Corp shares (NYSE: GME), in February the fund received more than 20% of profits, managed to compensate for some of their losses, writes CNBC.
Profit Melvin Capital, which previously made large rates against the shares of the Retailers of the video game, amounted to 21.7% in February. The fall of the Foundation in January reached 53% during dramatic history with a short-skil, which led to a sharp rise in Gamestop shares and other companies.
At the end of January, the Foundation announced the closure of short positions on Gamestop shares when stocks rose. And his founder Gabu Plotkin even had to appear to give testimony before the Congress due to the strongest volatility on the market, along with other "disturbing calm" - Ken Griffin from the Citadel Foundation and the retail trader Kita Gill.
Melvin Hedge Foundation Along with many other funds on Wall Street ranked short positions on Gamestop shares in the hope that their market value will fall below this level, but many short positions on a number of shares were noticed by retail traders on brokerage platforms in social networks, such as REDDIT WALLSTREETBETS forum.
A surge of purchases of GameStop shares and other companies caused a compression of short positions (short-skew), which led to an even greater increase in prices for stocks. Thus, the price of Gamestop shares at some point fell from less than $ 20, but then sharply went to an increase to almost $ 500, and it fell as sharply.
The Plotkin Foundation was saved by receiving an investment, while Citadel and Point 72 have invested $ 3 billion in it. Plotkin informed the US Chamber of Financial Services that sellers of short positions may have to change their strategy after retail traders provoked a sharp splash Some of the shares.
"I think that we will have to adapt to Melvin, and the entire industry," he said.
- In preparation, CNBC materials are used.
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