Melvin Capital Investments: Where Is the GME Short Seller Now?

More than a year after losing as much as 53 percent of its value for shorting GameStop (GME) stock during the short squeeze, hedge fund Melvin Capital is going long on reopening stocks.

Here’s more on Melvin Capital’s current investments in a fundamentally different retail investing landscape.

In early 2021, Melvin Capital was one of the hedge funds heavily impacted by the retail investor movement that sent GameStop stock soaring. After GME increased more than 1,730 percent in the first month of the year, Melvin Capital lost big. The hedge fund was shorting GME big time and believed that its brick-and-mortar model was antiquated.

At GME’s peak, Melvin Capital’s valuation sank 53 percent. The hedge fund reportedly closed all of its short positions in May 2021. As of February 2022, Melvin is taking a different path.

Melvin Capital is now going long on stocks that reflect a reopening economy (think in-person events and travel companies). So, what do those investments look like, and is Melvin worth trusting?

Melvin Capital bought more Live Nation Entertainment (LYV) stock and increased its holdings by 64 percent to nearly $1.2 billion. This move came in December 2021. According to CNBC, Live Nation is Melvin’s largest position now. The fund hopes to hop on the in-person event company’s 62.9 percent growth last year.

Melvin has also increased its holdings for travel stock Hilton Hotels (HLT), which now accounts for an additional 7 percent of its portfolio. Melvin dropped 6.9 percent of its Expedia (EXPE) stock but is holding on to the travel company nonetheless.

Another Melvin investment is Bath & Body Works (BBWI). In 2021, BBWI stock increased by more than 100 percent, which added to a similarly impressive bull run the year prior.

Companies like Uber (UBER), Advance Auto Parts (AAP), and Marvell Technology (MRVL) are also part of Melvin Capital’s shifting investment portfolio now.

Other companies on Melvin’s list of top holdings include:

• Bill.com (BILL)

• Laboratory Corporation of America (LH)

• Datadog (DDOG)

• Atlassian Corporation (TEAM)

• Snowflake (SNOW)

• IAA (IAA)

Melvin Capital, helmed by Gabe Plotkin, focuses on consumer stocks. Nowadays, the fund is more about going long than shorting stocks. After getting burned by GME, Melvin Capital accepted emergency funds from Citadel and Point72, who bailed out the fund to help it survive a turbulent time.

Melvin Capital’s latest moves are different. The hedge fund reportedly no longer shorts stocks and its traders base the portfolio on growth potential. Still, its past is freckled by at least nine lawsuits based on myriad claims, one of which was a reported conspiracy against retail investors. Melvin Capital never admitted fault in any of the cases. Retail investors have a hard time trusting Melvin Capital's moves since the GME debacle that almost shuttered the fund.

Investors should cross-reference Melvin Capital’s holdings (most of which are rooted in the consumer sector) with external analysts for clarity. This helps manage risk as you expand your portfolio.