melvin capital owns robinhood

The recent GameStop trading frenzy has prodded legendary trader Steve Cohen to once again open his hedge fund, Point 72 Asset Management, to new investors, FOX Business has learned.

The reason? Well, it depends on who you ask.

In recent weeks, Cohen’s hedge fund has taken a significant hit from the GameStop imbroglio, declining as much as 15% in January based largely on a Point 72 investment in Melvin Capital.

TickerSecurityLastChangeChange %GMEGAMESTOP CORP.34.78+0.77+2.26%

Shares fell another 31% on Monday.

Melvin, run by Cohen protégé Gabe Plotkin, was the target of a “bull raid” that focused on heavily shorted stocks that were snapped up by legions of day traders using their Robinhood trading app.

Melvin capital owns robinhood

When the frenzy is over, the stocks will trade sharply lower leading to massive losses among many small investors who speculated in a market they don’t fully understand.TickerSecurityLastChangeChange %AMCAMC ENTERTAINMENT HOLDINGS INC15.37+0.81+5.56%BBBLACKBERRY LTD.6.10-0.03-0.49%BBBYBED BATH & BEYOND INC.5.77+0.74+14.71%

Many of these newbies say they’re merely turning the tables on some of Wall Street’s top traders. Recently, these investors began to focus not only on GameStop but others including AMC, Blackberry and Bed Bath & Beyond — former penny stocks — that were being shorted by hedge funds.

In December, they launched a bear raid on the stocks snapping up shares and pushing them to astronomical levels.

Does melvin capital own robinhood

Additional information about your broker can be found by clicking here.

Margin trading involves interest charges and risks, including the potential to lose more than any amounts deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information.
These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing.

Citadel owns melvin capital and robinhood

ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. A prospectus contains this and other information about the ETF and should be read carefully before investing.

Customers should obtain prospectuses from issuers and/or their third party agents who distribute and make prospectuses available for review. ETFs are required to distribute portfolio gains to shareholders at year end.

Citadel Securities remains focused on continuously providing liquidity to our clients across all market conditions.”

Citadel LLC and the market maker Citadel Securities have a firewall between them, the latter does not know the positions of the former. Citadel Execution Services, part of the market-making business saw the most order flow from Robinhood during the third quarter.

Heightened volatility in companies like GameStop Corp. and AMC Entertainment Holdings, both companies with heavy short interest, caused Robinhood on Thursday to prevent customers from initiating new long stock positions in those names.

On Friday of last week, it raised $1 billion to meet its settlement capital requirements, and on Monday it raised another $2.4 billion.


As FOX Business was first to report, people with direct knowledge of the matter say Robinhood has indefinitely suspended plans to come public through an initial public offering that it was eyeing sometime this year.

Robinhood has around 13 million users now, up from 500,000 in just six years. Its biggest growth has come more recently, particularly during the COVID-19 lockdowns when people — mainly unsophisticated first-time investors — used the app as a form of entertainment.

Cohen had become a frequent Twitter user following his purchase of the New York Mets during the summer, only to close down his account after news surrounding Melvin and its ill-timed short sale of GameStop and a social media feud with Barstool Sports founder Dave Portnoy.

Wall Street executives say Cohen may be looking to replace his lost capital with new cash because of the heavy losses he incurred through investing in Melvin. A person close to Point 72 tells FOX Business that the fund is not facing a crisis of any type and Cohen believes now is an opportune time to raise new cash amid a market upheaval over the GameStop issues.

A spokesman for Point 72 declined to comment. A Morgan Stanley spokesman had no immediate comment.

The frenzy involving GameStop and a handful of heavily short stocks underscores the changing dynamics of the stock market.

There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Trading in cryptocurrencies comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.
Several federal agencies have also published advisory documents surrounding the risks of virtual currency.

We are pleased to have the opportunity to invest additional capital and take a non-controlling revenue share in Melvin Capital,” said Steve Cohen, Chairman and CEO of Point72.

About Melvin Capital Management Melvin Capital Management LP is a registered investment advisor founded in 2014 by Gabriel Plotkin, the firm’s Chief Investment Officer. The firm uses a bottom-up, fundamental research-driven process to identify investments employing a long-short equity strategy.

About Citadel Citadel is one of the world’s leading alternative investment managers. Citadel manages the capital of prominent investors from around the world including retirement programs, endowments and foundations, and sovereign wealth funds.

Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply. Please see the Fee Schedule.

Robinhood Financial is currently registered in the following jurisdictions. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Robinhood Financial is not registered.

The hedge fund Citadel LLC and the market maker Citadel Securities say they had nothing to do with the app Robinhood suspending some trading in stocks that have recently experienced a surge in volatility.

The Chicago-based Citadel, founded by billionaire Ken Griffin, had been accused by a swarm of investors on social media of colluding with the online brokers to freeze the purchase of shares in companies that have in recent weeks experienced short squeezes.

“Citadel is not involved in, or responsible for, any retail brokers’ decision to stop trading in any way,” a spokesperson for the hedge fund said in a statement.

“Citadel Securities has not instructed or otherwise caused any brokerage firm to stop, suspend, or limit trading or otherwise refuse to do business,” the statement added.

Similar Posts:

Leave a comment