Melvin Capital’s Gabe Plotkin apologizes for losses to investors – who want their money back

Melvin Capital’s Gabe Plotkin apologizes for losses to investors – who want their money back

Melvin Capital's Gabe Plotkin apologizes for losses to investors - who want their money back

In a dramatic about-face on Sunday, Melvin Capital founder Gabe Plotkin told investors he was delaying a surprise plan to return their money he revealed last week, The Post has learned.

Instead, Plotkin said he plans to take the next few weeks to decide on next steps before shutting down his hedge fund.

“I’m sorry. I misunderstood this one. I made a mistake. I apologize,” wrote the hedge fund mogul – who was slammed by ‘meme stock’ investors last year. on Reddit who had targeted his fund for being a top short seller.

On Wednesday, Plotkin angered investors when he suggested a plan that would return investors their capital at the end of June – and then allow investors to reinvest in early July. Melvin, which was down 21% in the first quarter, would not try to reassure investors.

Instead, he would demand performance fees from potential customers, including those who had already lost money with him. According to reports, Plotkin said he would keep the fund small – less than $5 billion and focus on shorting stocks.

Plotkin added in the Sunday email that after speaking with investors he realized his suggestion to shut down Melvin was “deaf”.

Melvin Capital came under fire last year for its stance on GameStop.
INA FASSBENDER

“Some of you feel that we were not a good partner. On reflection, you are correct,” Plotkin wrote.

Investors were left puzzled after the initial rating. But now they are more confused than ever, sources told the Post. An investor told The Post the email was “f***ing wacky.” This investor added that he had “no idea” what the email actually meant.

“I just want my money back,” fumed the investor.

Although the mea culpa sent by Plotkin on Sunday may have taken on a more deferential tone than his note on Wednesday, investors still do not seem reassured. “He made us lose a lot of money,” the source adds.

Plotkin is obviously still licking his wounds after GameStop’s now-infamous meme stock short squeeze crashed his fund in January 2021.

The full text of the letter is below:

To our partner friends,

I’m sorry. I misunderstood this one. I made a mistake. I apologize.

As we noted in our letter last week, we tried to balance several goals when determining a way forward. Our goal was to return to a size where we could once again generate peak returns for our investors while retaining the team we’ve built over a decade. After exploratory conversations with several investors, during which we received positive feedback, we decided to move forward with the approach we described in our letter.

In hindsight and despite our intentions, we now recognize that we focused on future returns and team continuity without sufficiently considering your investment losses. We appreciate how difficult January 2021 has been for all of you and are sorry that we have not acknowledged this enough. After many conversations with our investors on Thursday, Friday and Saturday, it’s clear to me that I was initially deaf. I especially want to thank our day one investors for their candid thoughts. Some of you felt that we were not a good partner. On reflection, you are correct.

Integrity is a fundamental value of our firm. My grandfather, Melvin, after whom our firm is named, lived by the highest ethical standards and passed those values ​​on to me. There is enough interest and critical mass to move forward with the plan outlined in last week’s letter. This is now completely irrelevant to me. At present, our structure for the future must be based on partnership and principle. We are taking the next two to three weeks to process the feedback we have received from all of our investors, and will come back with a more balanced proposal that better aligns with our collective interest.

I try to teach my kids that everyone makes mistakes, but ultimately it’s about how you deal with them. Responsibility is essential. I was wrong and for that I apologize to all of you.

Sincerely,
Gabe

Gabe Plotkin
CIO & Founder

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