<p><img src="https://static1.businessinsider.com/image/5d4302d0100a2406677051ff-1500/img20190731112912.jpg" border="0" alt="GameStop NYC" data-mce-source="Ben Gilbert/Business Insider"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Frenzied buying of GameStop stock is taking a toll on renowned hedge funds.</p><p>According to <a href="https://www.nytimes.com/2021/01/27/business/point72-gamestop.html">a New York Times report</a>, Point72, run by the Mets owner Steve Cohen, lost nearly 15% this year as the company's investment in Melvin Capital backfired.</p><p>Point72 managed close to $19 billion in assets and held a roughly $1 billion investment with Melvin Capital prior to the <a href="https://markets.businessinsider.com/news/stocks/reddit-day-traders-wallstreetbets-gamestop-gme-rally-upending-stock-market-2021-1-1030009280">GameStop feeding frenzy.</a></p><p>In recent weeks, Melvin became the victim of historic <a href="https://markets.businessinsider.com/news/stocks/how-retail-option-traders-are-supercharging-the-short-squeeze-in-gamestop-and-other-potential-bubble-stocks-1030006793">short and gamma squeeze conditions</a> after retail traders, led by Reddit's WallStreetBets forum, piled into shares of heavily-shorted stocks like GameStop.</p><p>Melvin had a significant short position in the struggling video game retailer, and as GameStop shares surged more than 1700% in January, losses piled up. The firm was eventually was forced to <a href="https://markets.businessinsider.com/news/stocks/steve-cohen-ken-griffin-invest-3-billion-gamestop-short-seller-2021-1-1030003305'utm_source=markets&utm_medium=ingest">accept a $2.75 billion investment</a> from outside sources to stabilize what was once a top-performing fund.</p><p>One of those sources was Steve Cohen's Point 72. The firm was reported to have added $750 million in cash to help stabilize Melvin earlier this week.</p><p><strong><em>Read more: </em></strong><a href="https://www.businessinsider.com/cathie-wood-ark-invest-analysts-top-10-stock-picks-q4-2021-1'utm_source=markets&utm_medium=ingest" target="_blank" rel="noopener"><em>'We're very surprised we didn't underperform in the 4th quarter': Cathie Wood and her analysts break down their stock-selection process and the top 10 picks that contributed to the outperformance of ARK ETFs in Q4 2020</em></a></p><p>But GameStop's stock has continued to jump on strong volume despite the historic rise in share prices and valuation throughout January.</p><p>The continued bull run has caused short sellers to incur losses of <a href="https://markets.businessinsider.com/news/stocks/gamestop-short-sellers-squeezed-losses-reddit-traders-army-cohen-palihapitiya-2021-1-1030006226">over $5 billion</a> in the name since retail traders first piled into GameStop on January 11.</p><p>On the other hand, GameStop's rise has led some retail traders to phenomenal returns. One trader has turned an investment of just <a href="https://markets.businessinsider.com/news/stocks/gamestop-trader-call-options-bet-shares-profit-millions-2021-1-1030003375">$53,566 into over $11 million</a>.</p><p>Alexis Ohanian, the co-founder of Reddit, called the GameStop saga a "bottom-up revolution" in an <a href="https://www.cnbc.com/2021/01/28/reddit-co-founder-alexis-ohanian-calls-gamestop-frenzy-a-bottom-up-revolution.html">interview with CNBC</a> on Thursdaty. Ohanian argued this is a seminal moment that pits the everyman against hedge funds and other powerful institutional investors.</p><p> "Just looking at the comments around the internet, it's something that's very personal for a lot of people and a chance for Joe and Jane America, the sort of retail buyers of stock, to flex back and push back on these hedge funds," he said.</p><p>As far as Point72, Melvin Capital, and other institutional investors are concerned, the Reddit phenomenon has been a disaster.</p><p>GameStop traded down considerably Thursday morning, and Robinhood customers said they had been locked out of buying additional shares of GameStop and other popular stocks including AMC.</p><p>Shares of GameStop traded at $415.05 as of 9:56 AM EST Thursday morning.</p><p><a href="https://markets.businessinsider.com/news/stocks/gamestop-stock-traders-reportedly-driven-loss-steve-cohens-fimr-point72-2021-1-1030015737#comments">Join the conversation about this story »</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/melissa-maker-clean-your-home-quickly-cleaning-expert-2017-4">A cleaning expert reveals her 3-step method for cleaning your entire home quickly</a></p>
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