In a dramatic U-turn on Sunday, Melvin Capital founder Gabe Plotkin told investors he was delaying a surprise plan to return their money that he unveiled last week, The Post learned.
Instead, Plotkin said he plans to take the next few weeks to decide on next steps before closing his hedge fund.
“I’m sorry. I misunderstood. I made a mistake. I apologize,” wrote the hedge fund mogul – who was famously slammed by “meme stocks” investors on Reddit last year who dumped his funds targeted as a prominent short seller.
On Wednesday, Plotkin angered investors when he proposed a plan that would return investors their capital at the end of June — and then allow investors to start investing again in early July. Melvin, which was down 21% in the first quarter, wouldn’t try to bless investors.
Instead, he charged performance fees from potential clients, including those who had previously lost money with him. Plotkin reportedly said he will keep the fund small — under $5 billion and focused on short stocks.
Plotkin added in the Sunday email that after talking to investors, he realized his proposal to close Melvin was “unmusical.”
Melvin Capital was slammed for his position at GameStop.INA FASSBENDER last year
“Some of you feel that we were not a good partner. If you think about it, you’re right,” Plotkin wrote.
Investors scratched their heads after the first note. But now they’re more confused than ever, sources told The Post. An investor told the Post the email was “fucking crazy.” This investor added that he had “no idea” what the email actually meant.”
“I just want my money back,” the investor raged.
While the mea culpa Plotkin sent on Sunday may have struck a more deferential tone than his Wednesday note, investors still don’t seem reassured. “He’s lost a lot of money for a lot of us,” the source adds
Plotkin is apparently still licking his wounds after the now-famous short squeeze on meme stock GameStop crushed his fund in January 2021.
The full text of the letter is below:
To our partner colleagues,
I’m sorry. I misunderstood. I made a mistake. I apologize.
As we noted in our letter last week, we have attempted to balance several goals when identifying a way forward. Our focus has been to get back to a scale where we can once again deliver industry-leading returns for our investors while retaining the team we’ve built over a decade. After exploratory discussions with several investors, during which we received positive feedback, we decided to proceed with the approach outlined in our letter.
With hindsight, and despite our intentions, we now recognize that we have 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 regret not acknowledging it enough. After numerous discussions with our investors on Thursday, Friday and Saturday, I realize that I was initially unmusical. I especially want to thank our Day One investors for their open thoughts. Some of you feel that we were not a good partner. When you think about it, you’re right.
Integrity is a fundamental value in our company. My grandfather, Melvin, after whom our company is named, lived by the highest ethical standards and instilled those values in me. There is enough interest and critical mass to move forward with the plan outlined in last week’s letter. I don’t care at all now. At this point, our go-forward structure must be about partnership and principles. We’re taking the next two to three weeks to process the input we’ve received from all of our investors, and we’ll come back with a more balanced proposal that better aligns our common interests.
I try to teach my kids that everyone makes mistakes, but ultimately it’s about how you deal with them. Accountability is key. I misunderstood and for that I apologize to each of you.
sincerely,
gift
Gab Plotkin
CIO & Founder