The video game retailer Gamestop of retail investors out tricked hedge Fund, Melvin Capital, has lost in January, an Insider, more than half of its assets. The of Melvin Capital, invested capital, which amounted to the beginning of the year to 12.5 billion dollars, have been reduced until the end of the month to 53 percent, said a with the Numbers in a familiar Person.
Due to the injection of capital of 2.75 billion dollars, with the help of the hedge Fund Point72, and Citadel had their Partner before the break-up of saved, have Melvin Capital in January with assets of more than eight billion dollars to complete.
The purchase
Melvin Capital had with short sales on a case, the speculated price of the Gamestop share price and, therefore, speculated. This is because small investors have agreed on the Internet to purchase onslaught, the share price rose, so that Melvin suffered billions in losses.
For short sales to borrow investors shares and sell them in the expectation they can later be cheaper to buy back, to then return to the regular owner. The price difference is your profit is based on. If the bet goes wrong and the price rises, it is forced a short seller, the shares at any price to buy back.