Even with the hedge funds Melvin Capital being on the brink of disaster due to numerous failed trades in the past year, it looks like they are taking another bet against Gamestop. With over $1 billion dollars in losses in the first few weeks of this year, many speculated that Melvin could even close their doors for good this year. According to a recent SEC 13F Filing Melvin Capital shows holdings of nearly $12 million dollars in Put options. An investor normally buys put options in hopes for the asset to lose value, which then allows the put option to go up in value.

Gabe Plotkin (the founder of Melvin) has proven time and time again to have made bad investments, which could put his and his client’s capital at risk potentially. Just this week Gamestop stock along with other meme stocks such as AMC entertainment have surged after lagging in performance for the last few months.

Ken Griffen’s Citadel also recently pulled out most of its cash infusion in Melvin capital early this year. Citadel gave Melvin around $2 Billion during the initial meme stock mania which happened in early 2021. It is unknown exactly why Citadel withdrew this capital but speculation of the situation paint s clear picture from an outsider looking in.

Short sellers have been in the headlines quite often in the last 12 months. As of recently the Department of Justice has been increasingly probing firms affiliated with short selling stocks. Most of the names on this list are quite familiar even to retail investors. This includes firms such as Melvin Capital, Orso Partners, Sophos Capital Management, and Citron Research. In 2021 federal agents reportedly raided the home of Andrew Left, the Founder of Citron Research.


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