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In a dramatic about-face on Sunday, Melvin Capital founder Gabe Plotkin told investors he was delaying 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 next steps before closing his hedge fund.
“I am sorry. I got this one wrong. I made a mistake. I apologize,” wrote the hedge-fund mogul — who famously got slammed by “meme stock” investors on Reddit last year who had targeted his fund for being a prominent short seller.
On Wednesday, Plotkin angered investors when he suggested a plan that would return investors their capital at the end of June — and then allow investors to reinvest in the beginning of July. Melvin, which was down 21% in the first quarter, wouldn’t try and make investors whole.
Instead he’d demand performance fees of potential clients, including those who previously lost money with him. According to reports Plotkin said he would keep the fund small — under $5 billion and focus on shorting stocks.
Plotkin added in the Sunday email that after speaking with investors he realized his suggestion to shut down Melvin was “tone deaf.”
“Some of you feel that we were not being a good partner. Upon reflection, you are right,” Plotkin wrote.
Investors were left scratching their heads after the initial note. But now they’re more confused than ever, sources told The Post. One investor told The Post the email was “f***ing wacky.” This investor added he had “no clue” what the email actually meant.”
“I just want my money back,” the investor fumed.
While the mea culpa Plotkin sent Sunday may have struck a more deferential tone than his note Wednesday, investors still don’t appear to be assuaged. “He lost a lot of us a lot of money,” the source adds
The full text of the letter is below:
To our fellow partners,
I am sorry. I got this one wrong. I made a mistake. I apologize.
As we noted in our letter last week, we tried to balance several objectives when determining a path forward. Our focus was on getting back to a size at which we could again generate industry leading returns for our investors while retaining the team we have built over a decade. After exploratory conversations with several investors, in which we had received positive feedback, we decided to move forward with the approach we outlined in our letter.
In hindsight and despite our intentions, we recognize now that we focused on future returns and team continuity without sufficient consideration of your investment losses. We appreciate how difficult January 2021 was for all of you and are pained that we have not acknowledged this enough. After numerous conversations with our investors on Thursday, Friday, and Saturday, it is clear to me that I was initially tone deaf. I especially want to thank our day one investors for their candid thoughts. Some of you feel that we were not being a good partner. Upon reflection, you are right.
Integrity is a fundamental value at our firm. My grandfather, Melvin, after whom our firm is named, lived by the highest ethical standards, and he imparted those values to me. There is sufficient interest and critical mass to move forward with the plan laid out in last week’s letter. That’s now completely irrelevant to me. At this time, our go-forward structure needs to be about partnership and principle. We are taking the next two to three weeks to process the input we have received from all our investors, and we will come back with a more balanced proposal that better aligns our collective interest.
I try to teach my kids that everyone makes mistakes, but ultimately it is about how you handle them. Accountability is critical. I got this wrong and for that I apologize to each of you.
CIO & Founder