Citadel to Redeem $500 Million From Melvin Capital

Citadel, which is based in Chicago, and Point72 Asset Management — a fund based in Stamford, Conn., that Melvin’s founder, Gabriel Plotkin, once worked at — stepped in with a combined $2.75 billion in cash on Jan. 25. The injections helped stabilize Melvin, which has generated double-digit-percentage returns since Feb. 1, according to one of the people, who was briefed on its performance.

Melvin is still down 41 percent for this year through July, according to an investor letter reviewed by The New York Times, because of its heavy losses from January.

As part of its investment, Citadel receives a cut of Melvin’s revenue, in addition to the returns it gets on its money, the two people said. Citadel was also given the right to pull out at least some of its cash as early as the third quarter of this year, these people added — a right it is now exercising. (Hedge fund investors are typically required to leave their capital invested for a longer period.) Citadel, which manages $38 billion in assets, is itself up about 9 percent through mid-August, according to one of the people, who had been briefed on the firm’s returns.

Mr. Plotkin declined to comment. Kenneth C. Griffin, Citadel’s founder, did not respond to requests for comment.

Article source: https://www.nytimes.com/2021/08/21/business/citadel-melvin-gamestop.html