It’s Dec 2020 & your advisor says they’ve found the perfect fund – a top performer in recent years, up 47% to Nov & run by a Steve Cohen protege


“Sounds amazing, I’m in and while you’re at it, get rid of all my other stragglers – let’s have some conviction.”

Yesterday, I suspect investors almost lost every single Dollar.

Here’s why,

On Jan 22, the WSJ reported the $12.5bn fund down 15% in 3 weeks, due in part to a short squeeze in GameStop, a videogames retailer. “Melvin is known for running an aggressive short book”.

So let’s guess he had a ~10% short in GME ($1.2bn) on 31/12 at $15.

Tallies with the -15% return to 21/01 (GME $35) & -30% to 22/01 (GME $53) WSJ.

Yesterday GME touched $159 up 10x this year, and all his long positions were falling as traders smelled blood.

So, if I’m right, he was down roughly $12bn on the position intra-day, wiping out the fund on one bet.

Enter Citadel & Steve Cohen’s (mid-day yesterday) $2.75bn revenue share “investment” to meet his margin call.

What’s he long?

13F 30/09/20

– BABA – Chinese tech where the CEO is under siege
– Travel while the world is shutting borders – Expedia (owns 8% of the co) & Booking

Lesson – historic returns tell only 1 side of the story – what risk was taken?

GME +24% after hrs.

It isn’t over.