Thoughts on Melvin Capital
There doesn't seem to be a lot of information on them. Any insights into their interview process? How would you compare an offer from Melvin Capital to Point72 or Citadel GE? What would be the pay discrepancy at a junior level?
Any thoughts on working there (culture, stress, hours worked, etc.)? Gabe Plotkin described the firm as very human-intensive, requiring a lot out of analysts (link). Do juniors essentially just build out models or do they contribute to the analysis and idea generation too?
Any information would be greatly appreciated.
It pays a ton. Juniors just built out models though.
Know a few people that work there. They have been one of the best performing funds on the street over the past few years and pay is top notch.
Analysts there get paid over $1MM in a good year (years where they have returend 40%+). Varies widely depending on the year's performance.
That said, no work/life balance. expect to work seven days a week for a long time. Tons of people have burnt out from working there.
damn $1MM+ comp during a 40%+ year seems kinda low at a $10bn+ fund approaching $500mm AUM per IP. Melvin’s generating around ~$800mm in performance fees in that case and has only 25 IPs. seems stingy to not give senior analysts closer to 8 figures in that case BUT if there’s nowhere else better for the analysts to go for comp then market is market and there’s no need for Gabe to pay nearly as much as he could. life must be good at the top with that equity resid.
This is for an analyst with 1-2 years of buyside experience. The senior analysts of course get paid more.
Gabe takes 90%+ of that.
Why would anyone pay an analyst eight figures, just because there’s a huge bonus pool? Do you tip your cab driver $80 and pay your cleaning lady $500 an hour, just because you had a great year? In the HF game, you get paid to add value. If you don’t add value in a great year, you’ll get paid well and that’s about it. But generally speaking, you dont get paid $10 million or more just for showing up.
Wait how much do you think a senior analyst (3-4+ years w/ Gabe) would make in a 40% year?
Pay obscenely well but as said, the hours are brutal. My understanding is they have an official 6 day work week. Don't confuse banking hours with hedge fund hours either - banking hours are mostly spent fucking around, hedge fund hours are spent doing real work - just means the mental toll is much worse.
The Melvin analysts are super intensive model monkeys. They cover a large universe of names and have detailed models for all of them that they constantly update. There's obviously great exposure to top investors, but the reason the hours suck (early on) is the amount of modeling.
Are the models significantly more detailed than sellside models? Like is there a big effort in the amount of guesswork/granularity in estimating KPIs and detailed financial items that aren’t given by the company in order to more accurately model projections?
What is the best way to break into Melvin Capital? IB or ER? Is a major in STEM necessary because of the tech focus?
19yr-old kid reads about some place blindly paying people $1mm/yr. 19-yr old kid asks the world how to get a ticket into such place. Cute. It's never that easy, son.
lmao jesus christ
Go to LinkedIn and look at the profiles of the young analysts
Buy GME then you can "break" Melvin Capital
What exactly are they doing that's so unique that's generating these outsized returns? I guess my question is, what is their strategy?
You won’t find it on here.
This aged well pizz.
Plotkin has a stellar reputation and the team is small relative to AUM. I don't see how a seat at any of the multi-manager platforms would really be comparable.
What exactly are they doing that's so unique that's generating these outsized returns?
seem to just run a really tight process
My guess (and this is completely a shot in the dark) is that they are running a concentrated book with high vol. Usually streaks like these don't end well, see Ackman, Bill
Honestly would be shocked if he's paying his analysts 1mm+. Hedge fund guys are greedy bastards and they will pay you just enough to stay in your current seat. No one on the street is going to pay one of his recent grad analysts 1mm to leave, so he's probably paying them in the mid 6 figures and pocketing the majority of the fees.
It's not super concentrated, but it's high exposure to tech equities. $1M is the number I heard from current analyst, but don't know him well enough to say he wasn't inflating the number.
Analyst meaning junior employee out of banking or PE? If so that is a crazy number.
It is a firm that went from $1bn to $10bn+ aum over the course of a cycle with top bracket returns, a very heavy work schedule, and low turnover
If you look at the combination of those variables, that comp figure is not surprising (especially considering the founder has become a billionaire over this past cycle). If the top guy is making well into 9 figures and is focused on training his team really well (which they do) then you need to pay junior employees higher than the ~$600k other firms will throw at them
By the way, they are much more of a consumer firm than a tech firm
Streak seems to be having a rough patch
Lol this comment was spot on - all of you idiot monkeys giving sht for a very prescient comment
Pershing was up over 85% YTD and PSCM definitely still beats the market since inception, so it doesn't seem like a fair comparison.
Jesus this comment was incredibly spot on, far in advance too
Headhunter?
DSP
I’ve spoken to this women Kate Shahrestani who runs Athena Search who had an in with them as well.
Kate Shahrestani at AthenaSearch as well
$$$$
Damn didn’t realize these guys paid so well
makes me feel so poor
fwiw I heard they do good alt data work
Anyone know if they make any private investments?
They're up 47% through November so who cares if you're just a model monkey, you're a well-paid model monkey.
Unfortunate that they dropped the ball big time with the GameStop short
Pay definitely going to start going down if Ken Griffin and Stevie are going to be taking chunk of bonus pool
I don't follow, Melvin gets fees on the new aum?
ANy Melvin Capital Analysts here? How was today in the office?
beat up by retail traders and had to take a emergency bailout to stay afloat... oof
You think some of them are going to quit now and hop to another shop? Down 30% at the start of year = 11 more months of grinding 6 day work weeks for probably not much bonus.
Answer is yes for a typical firm and that is how 30% can sink an entire fund in short order. But in this case I suspect they have some solutions in place (hence the 2.7bn funding)
They have $200mm in management fee whether they make or lose money. You dont think thats enough to pay a what, 10-person investment team?
Gabe doesn't need the money and will obviously pay people even out of his own pocket if needed so he can keep the business running. Everyone chill.
I have a friend who works there right now. He told me that they might start letting some analysts go. My friend said he's safe tho.
Any idea who's getting canned? The analysts and the PMs? A lot of the analysts, or few?
The psychology underpinning your schadenfreude is fascinating
I'm gonna venture a guess...that the analyst responsible for GME is gonna get canned.
As more details come out this is quickly becoming one of the most interesting and entertaining fund blowup of all time. Simply amazing. Should be a movie.
It actually is amazing. Who would've ever predicted this? Not me. It's fascinating
And remember, they were down 30 percent on Friday, when the stock was 65; it's now at 115, so who knows how much more they lost. Then again, I wonder if they hedged their short by going long on some Friday afternoon or Monday.
But they've probably already covered no?
Yeah, would be interested to know. But as a confident trader, do you really think Plotkin -- when he saw the stock appreciate 50-100% in one day -- is gonna cover, or instead is going to think, "Well, it was up a crazy amount today... so it's gonna be down a crazy amount tomorrow and I don't wanna miss that move." I would think the latter.
Surprised he let it get this out of hand. BTW, for those thinking it was just retail -- do you really think fund analysts don't read social media and don't add to the froth strategically? Lots of funds were in on this. Reminds me of the London Whale.
Or Loeb / Icahn / Siritz buying HLF right after Ackman's short presentation. Think Loeb only held on for a few days
This thread aged well
According to this they avoided today's move
https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddit-board-mel…
There's no way Melvin Capital managed to exit their horrible positions without shooting GME to the stratosphere. I'm thinking they're bluffing.
If they were indeed lying when they broadcasted that they were out of the stock, will there be any repercussions from regulators?
Yeah, the sheer volume would shoot it through the roof. I guess they're legit just lying now?
total bluff and everyone knows that
Can someone explain why Melvin needed a bailout / capital infusion? I've read reporting that Melvin was only short via going long puts, in which case their losses would be capped, no?
They were also short common stock on the same names where they owned puts.
Thanks. Any idea what the general terms of the bailout might have been?
On the bright side, new openings at Melvin Capital!
So are they done or what? The only way they could have survived is to get a larger partner or partners to take some of their exposure with a deal. The 2.75bn clearly wasn't enough.
Market manipulators. That's my thoughts.
Throw 'em in jail
You know, I’ve spent some significant time as of late spewing nonsense with knuckleheads whom have little to no real-life experience in finance. How did I forget the Oasis? A much more productive way to utter my thoughts.
That said, and I open this up for discussion, there’s no way IMO Melvin has covered their position. The SI to float was still > 100% as of 1/27. So, that begs the question; why did citadel/p72 lend them $2.75b? Why would you lend that much capital to a fund who is, apparently, still in the trade that blew them up? Why would they be so adamant in helping a competitor (I know he’s Stevies protégé)? Well, let’s think. It’s well known the top players tend to herd the same trades. Why? Because no one wants to be the the one who underperformed. So, presumably, citadel is in a handful of names that Melvin is long. In order for Melvin to fund their margin call, they would’ve likely began selling their most liquid stocks (think FAANG), which would’ve likely forced a domino effect of liquidation as shops, like citadel, followed suit. If that’s the case, and it may very well not be, I’d certainly be worried when Melvin is actually forced to cover their position.
fyi - BBG's SI numbers are on a significant lag.
Ortex reported it around 138% for 1/27 and I saw BBG updated it to the same around 830 last night.
yep its 60% now as per Markit.
Andrew Ross Sorkin reported yesterday after a phone call with Plotkin that Melvin "closed out of their short." In this case, you think that was a lie?
GME has traded an absurd amount of $s and shares (> 100% of mkt cap) each of the last few days. Liquidity has not been prohibitive to closing out a short position, even one of whatever Melvin's size may have been. Am sure plenty of new shorts have come in.
You're right that they funded them to make sure they made their margin call, but part of that was almost definitely so that they could de-lever and unwind in any orderly fashion. If they are margin called they would get force sold out of everything, whereas with the capital injection they could unwind their positions in an orderly fashion. Them selling down $20 billion of securities across the board over a few days isn't going to feedback loop tank the market. Yes they wanted an orderly unwind, yes they almost definitely got out of the short.
Melvin is toast, down 70 plus. Still unwinding. Looking at liquidity of the long book 1/3 was one day1/3 was 5 days 1/3 was a month ish.
The capital was to buy time, freezing out retail was to buy time. We aren’t over yet, it’s just a question of does it stay an intra mkt l/s problem, or the entire mkt problem. Primes think they have a fence around it. We shall see.
Appalling risk management. So much for "greatest" L/S fund as described by WSJ.
Melvin is toast, down 70 plus. Still unwinding. Looking at liquidity of the long book 1/3 was one day1/3 was 5 days 1/3 was a month ish.
The capital was to buy time, freezing out retail was to buy time. We aren’t over yet, it’s just a question of does it stay an intra mkt l/s problem, or the entire mkt problem. Primes think they have a fence around it. We shall see.
Whose saying they’re down 70?!? I thought they were down 30 from the media
its 70 now at least
After today, they are for sure toast. Guessing GME is going to finish at 400+, and eventually they have to cover their shorts
Melvin Capital might actually be finished. They probably lied about covering, and there is still a short interest of over 100%, while the price has risen to 400$. The market manipulation attempt also backfired, which can cause the price to skyrocket even more, once trading GME is allowed again.
Given all of the circumstances, this might be "good" for the Biden Administration that promised to be more tough on white collar crime.
Don't know much about shorting, but the still-high short interest can be from a brand new slate of funds that went short at say, $350, right? With Melvin being completely out, per CNBC's reporting.
It can be. But having been in the business - I just can’t imagine any PM being willing to take a short position in GME right now
Surely investors will start trying to pull funds too at this point? Especially given their management of the situation.
Is Ortex the end-all-be-all of market metric updates? Their short float was in the 60s this morning, but that gets buried on reddit.
Any one know how much Melvin is down now? Over 50%? I heard down 70 by some of the posters...
Heard 70 as well from multiple sources.
Any idea If that’s actually right??? If so, this will go down to be one of the most catastrophic blow ups of all time, next to LTCM
Biggest question is -- did OP take the offer he got from Melvin Capital this past June?
RIP
Any ideas how they lost so much? Long puts should be limited to premium lost. Short stock (5.4 million shares) couldn't have caused a 30% drawdown by Friday when GME was only up $48 on the year, which equates to a $258mil loss. I know their other shorts got hammered too, but down $4bn on Friday the 22nd before the really major moves is out of this world. My guess is they sold calls to fund the long puts, and option sales aren't subject to 13F reporting so we don't know about that side? It's fairly common to sell options to fund option purchases, especially if they've been bearish GME for a long time and have to keep paying premium to roll the put options.
The whole short book ripped hard, not just gme. Big shorts and puts in bbby and several several other names... and there longs got crushed as all the funds de levered. Crowded trades and leverage, that will always get ya...
Normally when this happens like in quant 2007 if you can hold out through the drop and not de lever / unwind you will catch the reversal on the other side and be almost flat. So when it’s happening you do every you can not to sell / cover, but here it wasn’t enough.
Where are you getting that 5.4m shares short from?
That's the size of their 13-F put option exposure. I think he conflated short shares with puts held.
The 5.4million shares is 10% of float. I recall seeing some of the earlier reddit long theses on GME, and they cited Melvin's short sales and put exposure. It's possible they conflated the 2, which is where I got the number. 5.4million shares is also a little bit more than 10% of float...not that they're great risk managers, but even a relatively poor risk manager would know to not be short too much of float?
The 5.4million shares is 10% of float. I recall seeing some of the earlier reddit long theses on GME, and they cited Melvin's short sales and put exposure. It's possible they conflated the 2, which is where I got the number. 5.4million shares is also a little bit more than 10% of float...not that they're great risk managers, but even a relatively poor risk manager would know to not be short too much of float?
Stellar L/S equity shop
An older interview with Plotkin, if anyone's interested. As an aside, doesn't seem like he's a bad dude:
If Gabe didn't go to a semi-target and wasn't Jewish, there is no way he gets a job at SAC and break into the buyside. Listening to him is painful and he clearly isn't all that eloquent. Imagine listening to him pitch an investment thesis.
Roaring Kitty has much more clarity in his presentation and thesis construction. Roaring Kitty didn't attend a target however but clearly you can tell if the dude did attend a target he would've carved out a decent buyside career.
Your comment is just so hilariously wrong on so many levels not sure where to begin
bahaha hilariously dumb on Gabe. I do agree DFV could have worked an institutional career and is more thoughtful than many in industry
I'm sorry, is this wildly anti-Semitic comment just going to remain on the site without moderation? Seriously?
I won't comment on whether this is anti-Semitic or not, but I will say this is a wildly stupid thing to say.
Get out while ya can!!!!!!!
lmao.....
Melvin -49 for Q1 after -7 for March.
https://www.bloomberg.com/news/articles/2021-04-09/hedge-fund-melvin-ca…
How have LP's not asked for their money back yet...this is quite interesting. I thought the bad press would lead to severe outflows.
Ya i'm surprised that hasn't been the case. Maybe we'll see it after sustained under-performance?
I'd be surprised if they didn't have lock-ups that were at least a quarter long.
Mollitia at ad dolores quae ducimus. Dolorum sapiente suscipit vero ullam facere saepe quis. Est animi vel minus sequi.
Commodi architecto soluta quae quia nemo. Quos aliquid maiores quo recusandae modi et. Iusto pariatur pariatur ad ipsam quis sunt. Est magnam ut consequatur cum est voluptatem.
Temporibus ratione quidem voluptatibus. Quibusdam ut architecto quasi odio delectus perspiciatis distinctio dicta. Et nesciunt qui ratione deserunt et. Eos et fuga veritatis enim ea numquam omnis. Natus dolorem repellat sit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Eaque aperiam repudiandae voluptatum quidem sed. Beatae in occaecati tempora iusto. Praesentium doloribus tempora vel aut omnis aut culpa. Perspiciatis blanditiis molestias debitis quis ullam.
Rem quia alias sed doloribus aut. Tempora voluptate amet ducimus. Aut ut qui tenetur blanditiis eius accusamus. Voluptatibus omnis eos quia.
Aut voluptatibus itaque et commodi iure rerum. Tempore dolores necessitatibus deserunt rerum eligendi hic repellendus est. Distinctio totam quia autem quia aut debitis alias. Reprehenderit debitis sit cumque cumque suscipit molestiae est. Velit nam dolore maxime voluptas provident.
Sit qui deleniti animi explicabo. Similique voluptatibus sit dolore quo nemo. Rerum autem reprehenderit nam id aut esse est. Ut tempora dolorem quia. Sapiente iure repudiandae voluptatem libero. Ipsam eligendi est aperiam sequi ut ut.
Sit non quos et aut. Natus dolore quia corrupti id veniam. Aut ullam ducimus magni. Quia quod incidunt sit sunt eos. Omnis sint rerum id et. Aperiam dicta debitis aut at. Rerum qui consequuntur velit distinctio repudiandae.
Tenetur voluptas consequatur nesciunt nihil nulla. Est aut quo perferendis. Laboriosam praesentium consequatur molestias atque nesciunt. Et voluptate quisquam modi minima et. Eum est omnis optio nostrum repudiandae reiciendis eum.
Vel omnis earum earum vel consectetur cumque. Quam quia consequuntur laudantium soluta quibusdam eum nesciunt. Laborum molestiae eum repellendus laudantium.
Maxime exercitationem natus voluptas et maiores molestiae reprehenderit. Et qui laboriosam odit rerum mollitia voluptatum. Suscipit a placeat sit a et.
Exercitationem aut aut vel deserunt assumenda culpa temporibus laborum. Qui rerum molestiae iste nihil rem. Sunt quas qui earum ut.
Corrupti doloribus harum est ducimus. Perspiciatis est perferendis qui ut fugit quis omnis. Et consequatur doloribus recusandae cumque est sit. Non voluptate dicta eum ut quis dolores debitis. Aut et temporibus quisquam quis. Necessitatibus est nam reiciendis molestiae at earum dolores.
Dignissimos et deleniti aut expedita ex quos. Id dolores saepe velit aut. Optio eos neque quia officia eum modi. Repellendus autem dolorum atque ut veniam velit. Laudantium voluptatem voluptatem cum id eius sed ut et. Quia velit ut ullam rerum.
Ullam est sed temporibus. Eligendi ut natus maiores ad. Iusto velit ea et nam nostrum inventore distinctio. Ab placeat sunt totam impedit maiores rerum impedit. Recusandae numquam nisi impedit neque nostrum similique accusamus ex. Facilis quis rerum aut maxime commodi voluptatibus praesentium rerum. Vero cumque fuga qui totam.