Melvin Capital's Crazy EXCUSE to Congress!! [GameStop / Robinhood]

hey everyone me kevin here so as we know

tomorrow there is going to be

a whole host of testimony on what the

heck happened between

robin hood and gamestop and wall street

bats and melvin capital and citadel

well we have the written testimony here

from gabriel plotkin who is the founder

and chief investment offer uh from

wait for it melvin capital

oh the big short seller of gamestop this

is kind of like the opposite of what we

saw

from roman kitty or presumably will be

let's take a look at this here we go

here it is

okay here we go so we've got

chairman waters ranking member mchenry

and members of

the committee i would like to thank you

for this opportunity to share

melvin capital's perspective on the

recent trading activity in gamestop

i am the founder and chief investment

officer of melvin capital

i am humbled by these unprecedented

events uh yeah dude because you just

took

a few billion dollars and lit it up into

flames you got

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burned

uh okay so uh many investors on

all sides have experienced losses i'm

here today to share my personal

experience and be

helpful in this conversation yeah dude

people looking at you bro

in terms of the guy who isn't getting

getting gonna be getting some spanking

i understand that part of the focus of

this hearing is the decisions of stock

trading platforms

to limit trading uh of gamestop okay

this is hilarious

he's literally starting out by talking

about

it's robinhood's fault it's not our

fault

he's basically pointing the finger right

away oh my god

i want to make clear at the outset that

melvin capital played absolutely no role

in those trading platforms decisions in

fact melvin

closed out all of its positions and game

stops at gamestop

days before platforms put those

limitations in place

like you we learned about those limits

from news reports

i also want to make clear at the outset

that

contrary to many reports melvin capital

was not bailed out in the midst of these

events

really what was that like two billion

dollars y'all got from citadel

citadel proactively reached out to

become a new investor

similar to the investments others make

in our fun dude you're smoking

crack nobody's gonna believe that

bullcrap line you put together

that is a joke no we we just

need the two billion dollars they just

wanted to invest in us because we're

really good investors

really somebody wants to invest in

melvin capital because you just lost a

boatload of money on a trade

that all of a sudden made you so

attractive that conveniently

citadel comes out it gives you billions

of dollars

ridiculous uh citadel proactively

reached out to become

a new investor similar to the

investments others make in our fund it

was an opportunity for citadel to buy

low

right and earn returns for its investors

if and when

our fund's value went up oh my god

whatever dude

to be sure melvin was managing through a

difficult time

but we always had margin access and we

were not seeking a cash infusion right

my background melvin capital i'm here

testifying today far removed from my

background

i grew up in a middle class family in

portland maine i went to a public high

school

i studied hard and got into a good

college upon graduation i did not have a

job

today i'm married with four children and

my time is spent with my family

and on melvin capital which i founded

six years ago i named melvin after my

grandfather who ran a convenience store

i wanted notice how they always want to

paint like this normal american

story right i wanted the firm to

represent his values

integrity hard work taking care of

customers and employees and commitment

to excellence

melvin capital manages a hedge fund

investors such as academic institutions

medical research and other charitable

foundations pension funds retirees

and others invest with us we have 36

employees and hundreds of investors and

i feel a personal duty to all of them

melvin capital's

long short investing strategy

melvin specializes in consumer in the

consumer and technology sector including

companies like gamestop

autozone and expedia most of our

investments are long

in other words we buy stock in companies

that create

jobs grow the economy and develop new

products for consumers

we do this after extensive fundamental

research

sometimes literally for years literally

folks

literally we spend years on it because

we suck and it takes us that long

when our research convinces us that a

company will grow relative to

expectations we make a long-term

investment

when our research suggests a company

will not live up to expectations and its

stock price is overvalued

we might short the stock like with our

long positions our practice is to short

a stock for the long term

after extensive research we also

short stocks because when the market

goes down we have a duty to protect our

investors capital

oh okay okay yeah so you shorted

gamestop to

protect your investors that didn't work

out

are laws governing short shorting stock

and of course we always follow them

in addition it is very important to

understand that absolutely none of

melvin's short positions are part of

any effort to artificially depress or

manipulate downward the price of stock

and nothing about our short position

prevents a company from achieving its

objectives

it is just melvin's view about whether

it will

specific to gamestop we had a research

supported view

well before the recent events in fact we

had been

short game stops since melvin's

inception six years ago

earlier because we believed and still

believe that the business model

selling new and used video games in

physical stores

is being overtaken by digital downloads

through the internet

and that trend only accelerated in 2020

when because of the pandemic

people were downloading video games at

home as a result the gaming industry had

its best year ever but gamestop had

significant losses

january freeze untethered to

fundamentals

all right in january 2021 a group on

reddit began

making posts about melvin-specific

investments they took

information contained in melvin's sec

filings and encouraged others to trade

in the opposite direction

many of these posts were laced with

anti-semitic slurs directed at me

and others it's interesting notice how

he's

see he's making the opposite argument

here of

uh of roaring kitty here he's claiming

that they uh that basically people who

posted on reddit

encouraged others to trade in the

opposite direction of melvin to like

purposefully hurt melvin uh

oh this is interesting thunder nugget

says that's conclu that's cool hold on

one sec thunder nugget here

on online says that's collusion right

there citadel claims to not be involved

with investment actions that melvin or

robin hood took against the stock

yet coincidentally invested the absolute

or the

the amount of money that melvin lost at

the same time of the squeeze

citadel by 60 of robin hood's order flow

let's hope the justice system prevails

ooh good comment thank you thundernugget

watching on

twitch okay back to

the letter the post said things like

it's very clear we need a second

holocaust

the jews can't keep getting away with

this

okay others sent similarly profane and

racist text messages to me

can we get his number let's let's get

him on

let's interview the melvin guy in the

frenzy during january

gamestop's stock rose from 17 to a peak

of 483

don't i know my god i'm pretty sure i

have

a a memento that i will never get rid of

because it's i mean this is you know

this is part of history right here okay

if you've got some game stop

you got you gotta hold forever man

diamond hands forever oh i was so close

come on i was so close i perfectly

almost perfectly timed this

here look at this take a look on screen

right here

look at that one share purchased

at 459 baby yeah

come on who got closer to the peak than

that one share of gamestop i got

come on show it

okay let's keep going i don't think

anyone would claim

that price had any relation to the

intrinsic value of the company

the unfortunate part of this episode is

that ordinary investors were convinced

oh but were convinced by a misleading

frenzy to buy gamestop at 100 200 or

even 483

have now lost significant amounts

when this frenzy began melvin started

closing out its position

in gamestop at a loss not because our

investment thesis had changed

but because something unprecedented was

happening

we also reduced many other melvin

positions at a significant loss

both long and short that were the

subject of similar posts

amc that's it oh my gosh

loser i'm personally humbled by what

happened in january

investors in melvin suffered significant

losses it is now our job to earn it back

and while i do not think that anyone

could have anticipated these events

i have learned much from them and i'm

taking steps to protect our investors

from anything like this happening again

in the future

i look forward to answering your

questions dude melvin capital guy

basically here's what melvin capital did

he said hey look

short selling's normal this is like a

smoking gun right here come on this is a

joke you got to be f

kidding me like i'm sorry this is this

is ridiculous

the fact that citadel invested in melvin

to proactively invest in melvin because

they believe in melvin

okay we'll see we'll see what the

documentation shows on that one that

gets subpoenaed

because that's ridiculous uh and then he

basically

blames reddit for making posts about

melvin

he's trying to take the position that

melvin was targeted

because he's jewish that's what he's

doing here he's

like oh i uh i'm i'm getting targeted

because i'm jewish

and now they're they're trying to do

things that ordinarily wouldn't happen

and they're trying to make us lose a

bunch of money and we lost a bunch of

money

well there you have what the ceo of

melvin capital is going to say

tomorrow before questions if you found

this helpful consider sharing this

also make sure to watch the roaring

kitty video and make sure to come to the

live stream

at 9am pacific time 12 p.m eastern

standard time

on february 18th to watch the entire

hearing

unfold live we'll get to see the uh the

uh

questions and answers too

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