Hedge fund Melvin Capital became well-known for all the wrong reasons in 2021 when it lost more than half of its held assets shorting GameStop stock (GME) during the infamous short squeeze. Nearly two and a half years later, founder and chief investment officer (CIO) Gabe Plotkin announced on Wednesday, May 18 that the hedge fund is shutting down and returning cash to investors.
Plotkin’s upcoming moves are in question after bad investments took his company down. Here are the details on Plotkin’s net worth and where he may be heading next.
Gabe Plotkin’s Melvin Capital is shutting down after eight years.
Melvin Capital announced that it’s shutting down after about eight years in operation. Plotkin founded Melvin Capital in 2014 and named the company after his grandfather. He says the company will wind down funds and return investor money by July.
Melvin Capital is most well-known for short-selling meme stocks like GME and AMC Entertainment (AMC). That didn’t go well — as meme stocks took off, Melvin Capital lost more than half of its AUM (assets under management).
Plotkin is shuttering his fund with a reported $7.8 billion AUM, which is below its early 2021 high of about $12 billion (after which the fund lost 53 percent of its AUM).
Gabriel (Gabe) Plotkin
Founder and CEO of Melvin Capital (from 2014–2022)
Net worth: $400 million (estimated)
- Eduation: Northwestern University (Economics, 2001)
What's Gabe Plotkin’s compensation and net worth as a hedge fund executive?
Plotkin managed to grow Melvin Capital by a substantial amount in the first six years of its operation. In 2017, Plotkin earned $300 million in total compensation for the year. At the time, he was number 20 on the list of highest-paid hedge fund managers. Thanks to then-successful GameStop short selling, Plotkin was able to spend $44 billion on a pair of neighboring Miami homes.
In 2019, Plotkin got involved in the world of sports investing. He bought a minority stake in U.S. professional basketball team the Charlotte Hornets (Hornets Sports and Entertainment) from basketball legend Michael Jordan.
By 2020, Plotkin’s total compensation grew even higher and reached $800 million for the year. Much of that was lost the subsequent year when Plotkin lost a reported $460 million amid Melvin’s short-selling downfall.
Ultimately, Plotkin’s net worth is estimated to be $400 million even after everything, which means he could make out better than many of his hedge fund’s investors.
Where is Gabe Plotkin heading next?
Plotkin first came on the investing scene under Steven Cohen, billionaire hedge fund leader and owner of the New York Mets baseball team.
While Plotkin’s future remains uncertain, he has clarified that it won’t be a hedge fund scenario. Plotkin said he’s going to “step away from managing external capital.”
Now, as the broad market braces for a projected recession, Plotkin decided that exiting is the best option for himself, other employees, and the hedge fund’s investors.