New Hedge Fund Melvin Capital Raises $700 Million

Jan 7 2015 | 5:31am ET

By Saijel Kishan and Simone Foxman (Bloomberg) -- Gabriel Plotkin, who was one of billionaire Steven A. Cohen’s top money managers, raised about $700 million for his new hedge fund, according to two people with knowledge of the matter.

Plotkin, 36, has posted a 0.8 percent gain in his fund, Melvin Capital, since it started trading on Dec. 11, said one of the people, who asked not to be identified because the information is private. Melvin Capital expects to manage $900 million by Feb. 1, the other person said. Plotkin declined to comment on the fundraising.

Plotkin, who left Cohen’s Point72 Asset Management at the end of November, received an investment of about $200 million from his former boss, according to one of the people. He joined Cohen’s previous hedge fund firm, SAC Capital Advisors, in 2006, where he oversaw more than $1 billion, including leverage, in consumer-related stocks.

Melvin Capital charges clients fees depending on the amount of profit it makes. The incentive fee will be 20 percent if it generates gross profits of as much as 12 percent, according to a November government filing. If the gain is greater than 12 percent but not more than 22 percent, the fee will be 20 percent plus the amount that matches the excess return.

If the return is 22 percent or more, the fund will charge a 30 percent profit fee. Melvin will levy the industry standard management fee of 2 percent of assets, according to the filing.

SAC Settlement

SAC last year paid a record fine to settle U.S. charges of insider trading and Cohen agreed to stop managing money for outside clients. He changed the name of his firm to Point72, which manages about $10 billion of his own fortune. Cohen was never charged criminally with any wrongdoing.

Plotkin was linked in March 2013 to a trade that led to the insider-trading conviction of a former SAC money manager. Plotkin hasn’t been accused of any wrongdoing. Jonathan Gasthalter, a spokesman for SAC at Sard Verbinnen & Co., said at the time that Plotkin did nothing wrong and that he built his career on conducting legitimate research.

Plotkin started his career at Ken Griffin’s hedge fund firm Citadel after graduating from Northwestern University in Evanston, Illinois, with an economics degree in 2001. After that, he was an analyst at North Sound Capital, a hedge fund firm in Connecticut, before joining SAC Capital.

Within five years of starting at Cohen’s firm, Plotkin was managing more than $1 billion, one of only a handful of managers at the firm with such a large portfolio. He was one of the highest-paid professionals at the firm, keeping 30 percent of his profits, while most of his colleagues earned between 15 percent and 25 percent, according to former colleagues who asked not to be identified.

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...