The Fed’s Jackson Hole meeting and a key inflation reading: What’s coming this week.
The hedge fund Citadel pumped billions of dollars into Melvin Capital after that fund’s bet against GameStop went bad, leading to huge losses. Now, Citadel is taking some of its money back.
Citadel has notified Melvin of its plans to retrieve $500 million of the $2 billion it injected in late January, according to two people briefed on the matter, who were not authorized to speak publicly about it. Under the terms of Citadel’s investment, the money will be returned at the end of September, the people said, as the third quarter draws to a close.
Citadel’s plan was first reported by The Wall Street Journal.
The cash infusion came in late January as Melvin was grappling with a huge turnaround in its short bet of GameStop. GameStop’s shares flatlined in recent years as it struggled to refashion itself from a brick-and-mortar video-game retailer into a more modern e-commerce company. But the company’s stock skyrocketed in January, after new directors from Chewy.com, which sells pet products, were named and as small investors piled into the stock, goaded on by the WallStreetBets forum on Reddit.
Melvin took heavy losses as it scrambled to cover the costs of its wrong-way trade. Some of its other short positions, including its bet against the movie-theater company AMC Entertainment, were hurting it, too.
Citadel, which is based in Chicago, and Point72 Asset Management — a fund based in Stamford, Conn., that Melvin’s founder, Gabriel Plotkin, once worked at — stepped in with a combined $2.75 billion in cash on Jan. 25. The injections helped stabilize Melvin, which has generated double-digit-percentage returns since Feb. 1, according to one of the people, who was briefed on its performance.
Melvin is still down 41 percent for this year through July, according to an investor letter reviewed by The New York Times, because of its heavy losses from January.
As part of its investment, Citadel receives a cut of Melvin’s revenue, in addition to the returns it gets on its money, the two people said. Citadel was also given the right to pull out at least some of its cash as early as the third quarter of this year, these people added — a right it is now exercising. (Hedge fund investors are typically required to leave their capital invested for a longer period.) Citadel, which manages $38 billion in assets, is itself up about 9 percent through mid-August, according to one of the people, who had been briefed on the firm’s returns.
Mr. Plotkin declined to comment. Kenneth C. Griffin, Citadel’s founder, did not respond to requests for comment.
Point72 is staying put.
“I have the same deal as Ken,” said Point72’s chief executive, Steven Cohen, “and no plans to redeem.”
As some people head back to the office or classroom after more than 18 months of pandemic disruption, maintaining social distance remains a concern, especially with the highly contagious Delta variant spreading nationwide. J. D. Biersdorfer, The New York Times’s Tech Tip columnist, has a few simple suggestions for using your smartphone to help stay informed and safe if you’re returning to the office or school.
Stay informed: Regular checks of school, municipal and state websites can keep you up-to-date about mask mandates, vaccine requirements, quarantines and other Covid-related news.
Carry your card: Certain institutions, venues and employers now have a vaccine requirement, and many New York businesses require proof and will enforce it next month. Your paper vaccination card serves as proof, but you can keep it safe at home and go digital.
Modify your commute: Commuting is more of a challenge for people who use mass transit. Last year, both Apple and Google added coronavirus-related business information to their maps apps, and a more recent Google Maps update now shows busy areas so you can better avoid crowds.
Fuel up: When a drive-through window isn’t an option for picking up your breakfast or lunch from a distance, there are other ways to minimize your exposure, like phoning in a pickup order to your local diner or bodega.
Video to go: The mobile version of your company’s preferred videoconference app lets you ditch a conference room and take a meeting anywhere, even without your computer.