Melvin Capital says it has been briefed against GameStop Corp. since 2014

Melvin Capital Management has been betting against GameStop Corp. since 2014 The hedge fund’s founder said in an advance copy of his public testimony before Congress on Wednesday that he’s been betting -2.78% on GameStop Corp. since 2014, but he’s always said he believes online video game downloads will outpace the retailer’s business model.

Gabe Plotkin’s Melvin Capital lost more than 50% of its investment in January, with losses mounting after quick bets on GameStop and other companies. The firm is responsible for the returns of a number of leading companies, including Stephen A. of Point72 Asset Management. Cohen and Daniel Sundheim, D1 Capital Companions.

GameStop’s move was driven in part by bullish traders with a vested interest in encouraging each other on platforms like Reddit to buy stocks and pick Melvin (the specific poster target) to exploit. GameStop’s relentless bullish movement created what traders call a contagion effect, and managers abandoned their confidence in and defended quick positions. bets. These managers also reduced their holdings in various companies to reduce the risk in their portfolios.

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The incident raised questions about the health of the market and triggered a federal investigation into possible market manipulation. Prosecutors requested information from brokers, including Robinhood Markets Inc, a popular online brokerage firm that many traders used to trade GameStop and other stocks.

The Interior Finance Committee will hold a hearing Thursday to investigate the actions of GameStop Inc. Ken Griffin of Chicago-based hedge fund Citadel LLC and market maker Citadel Securities, Robinhood co-founder Vlad Tenev, an anonymous trader who once worked online under the alias “Roaring Kitten.” Keith Gill, an anonymous trader who worked under the pseudonym “Roaring Kitten,” and others are expected to testify.

In his prepared testimony, Gill said he was a private investor who posted trades on social media rather than trying to boost GameStop’s stock price.

“The idea that I used social media to promote GameStop stock to uninformed traders is absurd.” Mr. Gill wrote. I have already made it clear that my channel is for educational purposes only.