Citadel will redeem $500 million of its shares in Melvin Capital: Report

Citadel will redeem a few quarter of its funding in Melvin Capital.
It’s unclear if the redemption would be the final from Citadel.
The Wall Avenue Journal first reported the information on Saturday.

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The hedge fund Citadel will redeem about $500 million of the $2 billion it invested in Melvin Capital earlier this yr because the latter suffered crippling losses amid a brief squeeze, the Wall Avenue Journal reported Saturday. 

The funding was for a non-controlling however revenue-sharing stake within the fund. 

Melvin Capital misplaced greater than half of its worth, over $6 billion, earlier this yr as retail traders bid up the shares of what grew to become generally known as “meme shares” — corporations like GameStop, AMC, and others — on which the fund had brief positions. The motion was began and led by members of the Reddit group “r/wallstreetbets.”

The rising share costs prompted Melvin Capital to shut its brief positions by shopping for shares of the corporations again, which in flip pushed their costs up additional.

Citadel, together with Level72, one other hedge fund, stepped in to assist Melvin Capital on the time. Citadel and Level72 are run by Ken Griffen and Steve Cohen, respectively.

It’s unclear if the redemption would be the final from Citadel. The Journal report mentioned that Citadel plans to stay a big investor in Melvin. Melvin capital ended the primary quarter down 49%.

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