Gabe Plotkin is back.
No, the onetime head of now-defunct Melvin Capital Management isn’t launching a new hedge fund.
This time around, Plotkin and Rich Schnall, co-president of Clayton, Dubilier & Rice, are leading a group that has agreed to buy Michael Jordan’s majority stake in the Charlotte Hornets professional basketball team.
The new group includes a number of minority investors, including two other current or former hedge fund managers—Dan Sundheim of D1 Capital Partners and Chris Shumway of Shumway Partners.
The team’s announcement did not set a price tag for the transaction.
Plotkin, who acquired a minority stake in the Hornets in 2019, is a former trader and consumer stock specialist who spent eight years at Sigma Capital Management, then a division of Steve Cohen’s SAC Capital Management. He launched Melvin in 2014, and for a number of years was one of the hottest new hedge fund managers.
He personally made at least $375 million in 2019, when his hedge fund was up more than 46 percent, and $825 million the following year, when he posted a 52.5 percent gain. From 2014 to 2020, Melvin generated an average annualized return of 30 percent.
Plotkin’s scintillating success, however, rapidly unraveled in January 2021, when retail investors posting on a Reddit forum targeted Melvin and his big short bet on video game retailer GameStop, whose stock suddenly surged in price along with other so-called meme stocks heavily shorted by high-profile hedge funds.
By the end of that January, Melvin was down 55 percent and had to be propped up by a $2.75 billion investment from Citadel and Point72 Asset Management. He was also hurt by the rising prices in other so-called meme stocks and wound up losing 39 percent for the year.
Alas, after losing another 23 percent in the first four months of 2022, Plotkin announced he was shuttering Melvin.
Plotkin isn’t the first hedge fund to own a majority stake in a North Carolina-based pro sports team. Appaloosa Management’s David Tepper owns the Carolina Panthers National Football League team.
Sundheim also purchased a minority stake in the Hornets in 2019. He founded D1 Capital Partners in 2018, after spending 15 years at Viking Global Investors, where he most recently served as the CIO.
Shumway previously worked at Julian Robertson Jr.’s Tiger Management Corp. where he was a senior managing director from 1992 through 1999.
He launched his hedge fund firm Shumway Partners in 2002. But after investors redeemed large amounts of money when he tried to reduce his role at the firm and hand the chief investment officer reins to Tom Wilcox, Shumway decided to shut down the firm altogether in early 2011.
Today, Shumway Capital seeds new hedge funds and invests in private and public companies.
