A principal reason for the hit to Melvin Capital\u2019s monthly performance were the massive losses the firm suffered when small investors bid up the stock of GameStop.<\/b>
\nMelvin Capital Management, one of the hedge funds pilloried on social media message boards for its short-selling bets that GameStop shares would fall, lost 53 percent on its portfolio in January, a person familiar with the matter said. A principal reason was the huge losses the firm suffered when small investors bid up the stock of GameStop. The Wall Street Journal first reported the amount of Melvin Capital\u2019s loss. Founded by Gabe Plotkin, a prot\u00e9g\u00e9 of the hedge fund billionaire and New York Mets owner Steven A. Cohen, Melvin Capital had $8 billion in assets under management at the end of January. That amount included $2.75 billion that Mr. Cohen\u2019s fund, Point72, and Citadel, another hedge fund, put into Melvin Capital, as well as fresh capital from new investors, the person said. Hedge fund returns at Citadel fell 3 percent for the month, about a third of which was caused by a $2 billion investment it made in Melvin about a week ago, according two people briefed on Citadel\u2019s results. Melvin Capital exited its position in GameStop after having to raise additional funds, Mr. Plotkin confirmed to CNBC last week. The firm was a main player in the market drama set off by a group of day traders who have been bidding up a handful of stocks that Wall Street had given up on \u2014 forcing losses on big hedge funds. The traders appear to be mostly small investors focused on a handful of stocks like GameStop and AMC Entertainment. But they have emerged as a new risk factor for large firms that had bet against those companies with what are known as short sales. While the financial damage on Wall Street appears so far limited to a number of firms, the volatility shook the broader market. The S&P 500 fell 1.9 percent on Friday, finishing its worst week in three months.<\/p>\n