Steve Cohen 's Point72 andKen Griffin 's Citadel are investing $2.75 billion inMelvin Capital .- Melvin is down about 30% this year as its short positions are getting hammered.
- Day traders have bid up the stock prices of
GameStop , Bed Bath & Beyond, and other popular shorts. - Visit Business Insider's homepage for more stories.
A pair of billionaire investors are swooping in to support a short-selling hedge fund in its battle against an army of irreverent day traders.
Steve Cohen's Point 72, Ken Griffin's Citadel, and other partners are plowing a total of $2.75 billion into Melvin Capital, the hedge funds said on Monday. They will receive non-controlling revenue shares in Melvin in return for their money.
Melvin will welcome the cash injection as painful short bets have left it down 30% year-to-date as of Friday, The Wall Street Journal reported.
Scores of retail investors, including some members of
Melvin takes more negative positions than most of its Wall Street rivals, exposing it to potentially heavy losses. It owned "puts" - bets that a stock price will fall - on 17 US-listed companies including GameStop and Bed Bath & Beyond at the end of September.
The firm's strategy has paid off in the past. Melvin has returned an average of 30% annually since its founding in 2014, and had grown its assets under management to $12.5 billion at the start of this year, The Journal said.