Gabe Plotkin’s Melvin Capital gained ground in July, but is still in a big hole thanks to Reddit traders’ January short squeeze

• Gabe Plotkin’s Melvin Capital made 5.4% in July, sources told Insider.
• The $11 billion fund is still down 43.2% for the year.
• The fund’s big short against the video-game retailer caused the firm to lose billions in January.

Gabe Plotkin’s chipping away.

After booking losses of 46% in the first half of the year, Plotkin’s Melvin Capital has started the second half with a solid month of returns. Sources told Insider the $11 billion hedge fund manager returned 5.4% last month despite the China-related tremors in the market. From the beginning of February through the end of last month, the fund is up 25%, sources told Insider.

Yet Melvin is down 43.2% for the year due to its massive January losses.53% The firm declined to comment. The S&P 500 was up 2.3% in July, and is up 17% year to date.

In January, the fund had big short positions against several stocks, most notably video-game retailer GameStop, which was a favorite of popular Reddit channel r/WallStreetBets. Retail traders piled into the stocks, dinging names like D1 Capital and Maplelane Capital in the process.

Melvin’s losses became severe enough that Citadel and Point72, run by Plotkin’s former boss Steve Cohen, pumped a combined $2.75 billion in exchange for a cut of future profits, though Plotkin has pushed back on media reports calling it a bail-out. The Reddit-fueled trading frenzy led to a Congressional hearing on retail trading, a new focus on retail trading platform Robinhood’s revenue streams, and several funds altering their shorting practices, including Melvin and Dan Sundheim’s D1.

Plotkin, a minority of the NBA’s Charlotte Hornets, began his climb out of the January losses with a big February, making 22%, but fell again in March, losing 7%. As of the end of the first quarter, the firm’s biggest holdings were Expedia, Mastercard, Visa, and Google, regulatory filings show. It had sold out its Alibaba and JD.com stakes that quarter.