Melvin Capital’s Gabe Plotkin apologizes for losses for investors – who want their money back

In a dramatic face on Sunday, Melvin Capital founder Gabe Plotkin told investors that he is postponing a surprise plan to return their money he revealed last week, The Post has learned.

Instead, Plotkin said he planned to take the next few weeks to decide on the next step before closing the hedge fund.

“I’m sorry. I made this mistake. I made a mistake. I’m sorry,” wrote the hedge fund mogul – who was famously criticized by “meme stock” investors on Reddit last year who had targeted their fund for being a prominent short seller .

On Wednesday, Plotkin angered investors when he proposed a plan that would give investors back their capital in late June ̵[ads1]1; and then allow investors to reinvest in early July. Melvin, which was down 21% in the first quarter, would not try to make investors whole.

Instead, he would demand performance fees from potential customers, including those who previously lost money with him. According to reports, Plotkin said he would keep the fund small – below $ 5 billion and focus on shorting stocks.

Plotkin added in the Sunday e-mail that after talking to investors, he realized that his proposal to close down Melvin was “tone-deaf”.

“Some of you feel that we were not a good partner. In hindsight, you are right, “wrote Plotkin.

Investors stood and scratched their heads after the first note. But now they are more confused than ever, sources told The Post. An investor told The Post that 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 said.

While mea culpa Plotkin sent on Sunday may have struck a more reverent tone than his note on Wednesday, it still does not appear that investors are convinced. “He lost a lot of us money,” the source added

Plotkin is apparently still licking his wounds after the now famous short squeeze on the meme stock GameStop shattered his fund in January 2021.

The full text of the letter is below:

To our partners,

I’m sorry. I made this mistake. I made a mistake. I’m sorry.

As we noted in our letter last week, we tried to balance several goals when we decided on a way forward. Our focus was to return to a size where we could once again generate industry-leading returns for our investors, while retaining the team we have built over a decade. After exploratory talks with several investors, where we had received positive feedback, we decided to proceed with the approach we outlined in our letter.

In retrospect and despite our intentions, we now acknowledge that we focused on future returns and team continuity without sufficient consideration for your investment losses. We appreciate how difficult January 2021 was for all of you and are sad that we have not acknowledged this enough. After countless conversations with our investors on Thursday, Friday and Saturday, it is clear to me that I was basically tone deaf. I would especially like to thank our first time investors for their honest thoughts. Some of you feel that we were not a good partner. On reflection, you are 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 he conveyed these values ​​to me. There is sufficient interest and critical mass to move forward with the plan that was laid out in last week’s letter. It is now completely irrelevant to me. At this point, our progress structure must be about partnerships and principles. We will spend the next two to three weeks processing the input we have received from all our investors, and we will return with a more balanced proposal that better matches our collective interest.

I try to teach my children that everyone makes mistakes, but ultimately it’s about how you deal with them. Accountability is crucial. I was wrong and I apologize to each and every one of you.

Sincerely,
Gabe

Gabe Plotkin
CIO and founder