CNBC reports that Melvin Capital’s hedge fund is currently considering a change in its plan. The fund would return capital to the investors and allow them to invest it again in a different fund run by Gabe Plotkin.

Plotkin, founder and CEO of Melvin Capital, is looking to unwind the current fund by the end of June to start a new one on July 1 using the capital the fund’s investors decide to reinvest. Plotkin will be able to achieve the above without needing to bring Melvin investors back up to par on their money in order to make a performance profit.

Plotkin wouldn’t be able to bring back investors after the fund lost 39% in 2021, and another 21% this year.

Plotkin will keep the new fund’s capital at least $5 billion. He plans to focus again on shorting stock prices, which has been a successful strategy over the years that earned him significant returns before it was wiped out by the meme stock craze of January 2021.

This would allow Melvin Capital and Plotkin to have a second chance following a disappointing year and a quarter. It also allows him to keep his staff who are likely to go due to low performance fees.

It is unclear what the impact of this plan will be on Melvin’s capital, as well as the amount that they would reinvest into the fund.

By Senad Karaahmetovic