Melvin Capital says it plans to unwind funds

Melvin Capital Management, the hedge fund burned by the GameStop mania, said it will unwind its funds and return cash to investors as losses accelerated during the market turmoil this year, CNBC confirmed.

“The past 17 months has been an incredibly trying time for the firm and you, our investors,” founder Gabe Plotkin wrote in a letter to investors. “I have given everything I could, but more recently that has not been enough to deliver the returns you should expect. I now recognize that I need to step away from managing external capital.”

News of the letter was first reported by Bloomberg.

The fund was down 21% at the end of the first quarter and the number might have gotten worse in the current quarter as the tech-driven rout intensified in the face of rising rates.

Melvin was one of the biggest victims from the meme stock frenzy last year due to its large short position in GameStop. Citadel and Point72 had to infuse close to $3 billion into Plotkin’s hedge fund to shore up its finances.

The embattled hedge fund increased its stake in Amazon and Microsoft significantly in the first quarter, according to a regulatory filing. Its largest positions as of the end of March included a number of reopening plays like Live Nation, Hilton Hotels and Expedia.

CNBC reported earlier this month Plotkin has been discussing a novel plan with its investors under which the firm would return their capital, while giving them the right to reinvest that money in what would essentially be a new fund run by Plotkin.