Steve Cohen Opens Fund To New Investor Cash After Losses From Melvin Capital Bailout
First it was Melvin (no) Capital demanding more, well, capital form existing investors such as Citadel and a new investor, Steve Cohen’s Point72, following news that i had lost a third of its AUM in just one trading day following the massive squeeze in GME and other meme stocks. Then, a few days later, over the weekend we learned that the two anchor investors were already underwater on their investment, as the losses at Melvin accelerated, bringing the total to over $7 billion or some 53% of the fund’s AUM, at which point we joked that the “new” investors may need new investors themselves.
Now, this (formerly comic) scenario is becoming all too real because as Charlie Gasparino reports, Steve Cohen – who over the weekend killed his Twitter account due to “threats”, is offering investors the “unique” opportunity to throw even more good money after bad, and his Point 72 fund “is no longer closed to new investors and began raising new investor cash from brokerages like @MorganStanley last week- sources. As Gasparino explains, the move comes “amid losses at firm due to exposure to Melvin Capital, the depressed hedge fund at the center of the GME frenzy. Person close to Pt72 contends that Cohen sees opportunities as mkts slide. Others say the timing is interesting.”
— Charles Gasparino (@CGasparino) February 1, 2021
Yes, the timing may be “interesting” but what is even more interesting is just how big the rolling capital shortfall is at Point72 now that the fund has backstopped what is ultimately a crippled Melvin Half Capital, which despite the new money infusion, is sure to liquidate once the redemption requests start coming in, locking in a sizable loss for Steve Cohen in just a few days.
The only winner here may well be Melvin’s Gabe Plotkin who, as we reported yesterday, was busy adding a tennis court to his $44 million Miami beachfront mansion when his hedge fund imploded, and who lucked out by finding some greater fools to make sure said expansion isn’t thwarted by the lack of (Melvin) Capital.
And now, SAC, pardon Point72, will be very happy to do the same and pass on some of Plotkin’s tennis court costs onto new investors.
Mon, 02/01/2021 – 15:34