Melvin Capital Management, the hedge fund that lost billions of dollars during last year’s meme-stock rally, has told clients it is to shut down its funds having taken another big hit from this year's market slump, according to a report by Reuters.

Melvin Capital Management, the hedge fund that lost billions of dollars during last year’s meme-stock rally, has told clients it is to shut down its funds having taken another big hit from this year's market slump, according to a report by Reuters.

Founder Gabe Plotkin, who averaged returns of 30 per cent between 2014 and 2020, has told clients in a letter that he will be winding down his funds and returning cash after "an incredibly trying time".

Melvin first suffered big losses in January 2021 when a short bet against Gamestop backfired after an army of Reddit retail investors sent the video game retailer's stock soaring by as much as 2,400 per cent. 

The decision to return cash comes after an investor backlash forced Plotkin to abandon plans to start charging performance fees again by removing Melvin’s high-water mark.