Melvin Capital’s founder Gabe Plotkin presented testimony, for the lawsuit against his firm. He said that he is humbled by the recent events involving his firm. He also accepted that his investors had a loss because of this event.
Highlights from the testimony
The stock trading platforms decided to limit the trading in GameStop. He cleared that, his firm had no role to play in those decisions by the platforms.He also stated that his firm is not bailed out of these events, yet.
- In his testimony, he spoke about his background and what are the values of his firm, that he incorporated from his grandfather.
- The Values were – integrity, hard work, customer care, support to employees, and commitment to excellence.
- He said that his firm does extensive research on the company before making its long or short investments.
- He also spoke about his firm’s practice of short and long selling of stocks. And their practice to short stock is to help protect its investors.These practices are all abided by the laws that governed short stocking.
About Reddit and its group members
- He said that a group on Reddit began to make posts, about his firm’s specific investment and encouraged traders to trade in the opposite direction.
- He stated that he was a target of anti-semitism.
- When the shares of GameStop started increasing because of the trend created in Redditt, his firm decided to close out its position in GameStop because something unmatched is happening.
- He cited that even ordinary investors faced a significant loss because of this misleading trend.
- He also stated that his investors had suffered a huge loss and it is his firm’s job to earn it back.
He also accepted that he had learned a lot from these unexpected events and is taking his steps very carefully to protect the investor’s from anything like this in the future.
- He further explained his firm’s relationship with GameStop, for 6 years. He also spoke about the fall of GameStop, citing the gaining popularity of online games and this pandemic.
- He also cleared about the investment that came in from Citadel and Point72, after this GameStop event was not meant to bail out the fund, as they incurred a huge loss.
These are key points from the testimony of Gabe Plotkin. Hope these pieces of information helps to understand the recent event that was one of its kind in stock trading history.