In an exciting turn on Sunday, Melvin Capital founder Gaby Plotkin told investors he was delaying a surprise plan to return their money he revealed last week, The Post has learned.
Instead, Plotkin said he plans to spend the next few weeks deciding on next steps before closing his hedge fund.
“I’m sorry. I got this wrong. I made a mistake. I apologize,” wrote the hedge fund mogul — best known for being criticized by “meme stock” investors on Reddit last year who targeted his fund for being a prominent short seller.
On Wednesday, Plutkin angered investors when he proposed a plan that would return investors’ capital at the end of June — and then allow investors to reinvest at the beginning of July. Melvin, which fell 21% in the first quarter, You will not try to make investors complete.
Instead, he was charging performance fees to potential clients, including those who had previously lost money with him. According to reports, Plotkin said he will keep the fund small — under $5 billion and focus on equity short.
Plotkin added in the email on Sunday that after speaking with investors, he realized that his proposal to close two files was “silent.”
“Some of you feel that we have not been a good partner. On reflection, you are right,” Plotkin wrote.
Investors were left confused after the initial note. But the sources told the Washington Post that they are now more confused than ever. One investor told The Post that the email was “eccentric.” This investor added that he “has no idea” what email actually means.
“I just want my money back,” the investor said angrily.
While the error that Plotkin sent on Sunday may have had a more respectful tone than his note on Wednesday, investors remain uneasy. “A lot of us have lost a lot of money,” the source adds.
The full text of the message is below:
To our fellow partners,
I’m sorry. You got this wrong. You made a mistake. I apologize.
As we indicated in our letter last week, we tried to balance several goals when determining the path forward. Our focus has been to get back to the scale at which we can deliver industry-leading returns to our investors while retaining the team we’ve built over a decade. After exploratory conversations with several investors, in which we received positive feedback, we have decided to move forward with the approach we outlined in our letter.
In hindsight and despite our intentions, we now realize that we focused on future returns and team continuity without adequate consideration of your investment losses. We appreciate how difficult January 2021 has been for all of you and feel the pain that we did not admit it enough. After many conversations with our investors on Thursdays, Fridays and Saturdays, it is clear to me that I was deaf at first. I especially want to thank our Day One investors for their candid thoughts. Some of you feel that we have not been a good partner. On reflection, you are right.
Integrity is a core value in our company. My grandfather, Melvin, after whom our company is named, lived up to the highest ethical standards, and he passed those values on to me. There is enough interest and critical mass to move forward with the plan laid out in last week’s letter. This is now completely irrelevant to me. At this time, our structure moving forward should be around partnership and principle. We’re taking the next two or three weeks to process the input we’ve received from all of our investors, and we’ll come back with a more balanced proposal that better aligns with our collective interest.
I try to teach my kids that everyone makes mistakes, but in the end it’s all about how to deal with them. Accountability is critical. I got this wrong and for that I apologize to each of you.
Head of Information and Founder