(Bloomberg) -- Gabe Plotkin spent the first half of January defending his hedge fund’s portfolio from a Reddit mob, the second half trying to convince investors he can survive a 53% loss, and early February explaining to Congress what happened.Now with the public spectacle subsiding, the most concrete sign is emerging yet that his Melvin Capital Management might actually manage to thrive anew. After adjusting strategy, Plotkin pulled off an almost 22% gain in February, about eight times the return of the S&P 500.So starts the most arduous part of the 42-year-old hedge fund manager’s bid to climb out of the hole left by January’s clash, in which retail investors organized on social media to drive up stocks such as GameStop Corp. that Melvin and others had bet would fall. The episode cost his investors -- including billionaire Steve Cohen, Brown University and the Robin Hood Foundation -- more than $6 billion.But even with the rebound, Plotkin’s fund, which had $8 billion at the start of February, will need to produce an additional 75% gain for earlier clients before they break even and start paying fees again. Investors who have stuck by or piled into the firm are betting he’ll be able to do that given his track record, which ranked him as one of the best stock pickers until this year.Last month’s performance was especially welcome for investors who decided to pony up a collective $250 million at the beginning of February -- likely seeing it as an opportunity to increase their exposure to a hedge fund that had been closed to new capital. The firm now manages $10.9 billion, including February’s gain and money that came in on March 1.That vote of confidence followed a late-January investment by Ken Griffin, his partners and his Citadel hedge funds, and Cohen’s Point72 Asset Management, which together gave the firm $2.75 billion in exchange for a three-year minority piece of Melvin’s revenue. The deal came together in a matter of hours.Plotkin said in his testimony to the House Committee on Financial Services last month that Griffin had reached out to him, and that the cash injection was not an emergency bailout.People close to his backers say they doubled down because they have faith in his trading acumen and personally like Plotkin, who’s known as family-oriented and relatively nice in an industry that’s famously cutthroat.Modifying WagersHe’s also a confident risk-taker. Since his days at Cohen’s shop, Plotkin was known for taking big positions on the long and the short side. His recent performance suggests January’s rout hasn’t damaged his ability to make money.He did modify his wagers on stocks he expects to tumble, saying in his testimony that he would avoid crowded shorts. A person familiar with his strategy said he also will take smaller-sized positions to limit exposure to single companies. And Plotkin told his team of data scientists to scour social media and message boards to look for shares that retail investors are rallying around.He has stopped using exchange-traded puts that show up on his quarterly filings with the Securities and Exchange Commission -- clues that allowed his firm to be singled out by the Reddit crowd.Some hedge fund observers question whether Plotkin will still be able to produce blockbuster returns without chunky short positions. In Melvin’s first year of trading, 70% of the fund’s profits came from his bearish bets.Plotkin, who grew up in a middle-class family in Portland, Maine, didn’t have a flashy start to his money management career. Early on he landed at Griffin’s Citadel, hired to evaluate new businesses rather than taking a more coveted investment position. After a year, he jumped to Greenwich, Connecticut-based North Sound Capital, where he was a consumer stocks analyst for two years, with limited trading authority.Then, in 2006, he took a job at Cohen’s predecessor firm SAC Capital Advisors, and within five years was managing more than $1 billion in consumer-related stocks. Plotkin was among only a handful of managers at the firm with such a large portfolio, and was one of its highest paid professionals. He also would join Cohen on client visits to demonstrate SAC’s deep bench of talent.Cohen’s HelpInside SAC he was known for rigorous research of companies he invested in, former colleagues said. He used detailed models to analyze everything from cash flows to product demand, rather than relying on market information from brokers. He also was an early user of credit-card data.Plotkin announced he was leaving Cohen’s firm in early 2014 to start his own shop, just a few months after SAC pleaded guilty to securities fraud and paid a record fine to resolve charges in the U.S. government’s six-year crackdown on insider trading. Plotkin, who wasn’t accused of any wrongdoing, was among several senior portfolio managers to quit. As part of the settlement, Cohen would -- for a time -- only be managing his own money, thus reducing the amount of cash to be spread among portfolio managers.By that December, Plotkin was up and running at Melvin. He named the firm after his grandfather who ran a convenience store and had the work ethic and integrity he wanted do emulate in his own business. Plotkin raised close to $1 billion, including about $200 million from Cohen’s firm, now called Point72. His only down year was in 2018, when he lost 6%. The next two years his returns were around 50%.Overall, he posted annualized returns about 30% from his start in 2014 through last year.Plotkin declined to comment for this article, but during his House testimony, he signaled confidence that he will turn things around.“We’ll adapt,” he said. “The whole industry will have to adapt.”(Updates with inflow data in fifth paragraph and details of SAC role in fourteenth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.