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Melvin Capital Management’s Returns, AUM, and Holdings

Nina Zdinjak

A former SAC Capital star trader, Gabriel Plotkin started his own fund at the end of 2014, called Melvin Capital Management, named after Plotkin’s late grandfather. Gabriel Plotkin sharpened his investment philosophy as a portfolio manager at Sigma Capital, which was SAC Capital’s (now known as Point72 Asset Management) subsidiary, where he managed a $1.3 billion portfolio centered on stocks from the Consumer Products industry. Big earnings came fast for Gabriel Plotkin, who found himself among Forbes’ list of the Highest Earning Hedge Fund Managers 2018. He earned his Bachelor of Arts in Economics from Northwestern University.

Not only did Gabriel Plotkin receive the blessing of his former boss, billionaire Steve Cohen, but also a $200 million seed capital to help launch Melvin Capital. The fund attracted a great deal of initial interest, raising $700 million in capital. During its relatively short existence, the fund, which focuses on the Consumer Discretionary sector, has seen some amazing returns. In 2015 Melvin Capital Management generated a remarkable return of 47%, placing it among Bloomberg News’ top-performing hedge funds with $1 billion in assets under management. Not only that, in its first year it managed to outperform Point72 Asset Management, which returned 15.5% in 2015. Melvin Capital Management’s most valuable long positions then included stakes in McDonald’s (MCD), Dollar Tree (DLRT), Domino’s Pizza (DPZ), and Constellation Brands (STZ), to name a few.

Gabriel Plotkin Melvin Capital Management

Last year was also a fantastic one for Melvin Capital Management, as it generated an impressive return of 41% net of fees. According to Melvin Capital’s plain brochure, on December 31, 2016, the fund had $1.87 billion in assets under management on a discretionary basis. According to Business Insider, that figure was nearly doubled during the first nine months of 2017, as it raised its asset under management to $3.5 billion. At the end of June of this year, the fund’s 13F portfolio was valued at $11.06 billion.

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During the second quarter of 2018, Melvin Capital made several changes to its portfolio. It added 58 new positions, raised its stake in 26 existing holdings, lowered its position in 28 stocks, and dumped 37 stocks. You can read more about these changes on the next page.

The biggest new position that Melvin Capital acquired was in internet giant Alphabet Inc. (GOOG), formerly known as Google, in which the fund obtained a position that counted 503,511 class A voting shares valued at $568.56 million. The second-largest stake the fund disclosed holding as of the end of June was in Take Two Interactive Software Inc (TTWO), owning 1.15 million shares worth around $136.22 million. Hedge funds tracked by Insider Monkey’s database are becoming more bullish on this stock, as 56 of them reported holding long positions in it as of the end of Q2, up by eight from the end of Q1.

Among its existing positions, Melvin Capital grew more optimistic about Restaurant Brands International Inc. (QSR) and Yandex N.V. (YNDX) during the second quarter, raising its stake by 550% to 1.30 million shares in the former, and by 343% to 5.75 million shares in the latter. Unlike Melvin Capital, the collection of smart money investors tracked by Insider Monkey were losing enthusiasm for Yandex N.V. (YNDX) during the quarter, as at the end of June there were 38 hedge funds long the stock, down from 48 a quarter earlier.

At the opposite end of the spectrum are several companies which the fund lost a great deal of interest in during Q2, including Mgm Resorts International (MGM) and Wynn Resorts Ltd (WYNN), in which the fund trimmed its stakes by 79% to 1.25 million shares and by 78% to 550,000 shares, respectively.

Lastly, out of the 37 stocks that Melvin Capital decided to dump in Q2, the biggest of those stakes were in Facebook, Inc. (FB) and Costar Group, Inc. (CSGP). The fund said goodbye to its position in Facebook, Inc (FB) that counted 952,751 shares on March 31, worth around $152.24 million, as well as its position in Costar Group, Inc. (CSGP), which included 270,000 shares valued at $97.92 million at the end of Q1.

Disclosure: None. This article was originally published on Insider Monkey.