gabe plotkin chief investment officer and portfolio manager of melvin capital management lp speaks during the sohn investment conference in new york may 6 2019 melvin capital the embattled hedge fund run by its once highflying founder gabe plotkin has been discussing a novel plan with its investors under which the firm would return their capital while giving them the right to reinvest that capital in what would essentially be a new fund run by plotkin under the terms being discussed plotkin would unwind his current fund at the end of june that fund was down 21 at the end of the first quarter plotkin would then start what would essentially be a new fund on july 1 with whatever money his investors decided to reinvest but he would do so without having to bring those investors back to even on their invested capital before he could earn a performance fee this socalled high water mark which requires hedge fund managers to return their investors capital to par prior to earning fees is virtually impossible for plotkin to meet on much of the capital in melvin given the funds losses of 39 last year and at least 21 so far this year plotkin according to people familiar with his plans has committed to keeping his new fund at or below 5 billion in capital and returning to a focus on shorting stocks a talent for which he was known for many years prior to suffering significant losses during the meme stock craze of early 2021 the plan would essentially give plotkin a do over after 18 months of very poor performance allowing him to keep his employees many of whom might otherwise choose to leave given his lack of performance fees from which to pay them