Plotkin, long one of the hedge fund industry’s most admired traders, became one of the financial industry’s most vilified players last month when an army of retail investors pushed the video game retailer’s stock much higher after his hedge fund shorted the stock, betting its price would fall.
On Thursday, he spent more than five hours answering U.S. lawmakers’ questions about how his firm Melvin Capital Management, which shed 53% of its value in January, lost so much money and whether it wasn’t playing by the rules.
But the fund manager, trying to strike a contrite note by saying he has to earn the cash back for his investors, turned the lens around and cast himself as having been hurt by Main Street investors who ganged up on the professionals.
“They exploited an opportunity around short selling and we will have to adapt and the whole industry will have to adapt,” Plotkin said.
“I don’t think investors like ourselves want to be susceptible to these types of dynamics. Whatever regulation you guys come up with we’ll abide by.”
Plotkin said Melvin is paid to take a view on companies and always follows financial industry rules. “If those are the rules then I will certainly abide by them.”
To him, GameStop was an ailing video retailer with structural problems and declining revenues.
“Anytime we short a stock, we locate a borrower, our systems actually force us to find a borrower,” he said, explaining that Melvin does not engage in so-called naked shorting which is prohibited.
He was not drawn into a debate about the merits of short selling.
And he sidestepped picking a fight with Elon Musk when a lawmaker asked him whether Musk’s tweet “Gamestonk!!”, seen as an endorsement of the stock, might have targeted him for having at one point bet against Musk’s electric vehicle maker Tesla Inc .
“I don’t want to speculate on what the motives of his tweet were. The stock did rise,” Plotkin said diplomatically.
GameStop’s gains deeply wounded Melvin as its assets shriveled to $8 billion from $12.5 billion at the start of the year. Billionaires Steven A. Cohen – Plotkin’s mentor – and Kenneth Griffin, who runs hedge fund Citadel LLC, gave Melvin Capital a $2.75 billion dollar lifeline.
Due to the pandemic, lawmakers and Plotkin used video to communicate and the fund manager sat in a drab room whose biggest feature was a large printer.
He said he comes from a middle-class family in Maine, and did not have a job when he graduated college.
He left out that he worked for one year at Griffin’s Citadel and soon joined Cohen’s SAC Capital Advisors. He has earned enough money during his career to buy a stake in the Charlotte Hornets professional basketball team and pay around $44 million for two side-by-side properties overlooking Miami’s Biscayne Bay last year.