Melvin Capital gained 21.7% net of fees in February - source

BOSTON (Reuters) - Melvin Capital, the hedge fund at the center of the GameStop trading frenzy, gained 21.7% last month, helping wipe away some of the heavy losses it suffered when it bet that the video retailer's stock would fall, sources said on Wednesday.

The fund, founded by Gabe Plotkin, lost 53% in January when retail investors joined forces to drive up the stock to trade at more than $400 a share. Plotkin had bet that GameStop stock, which had traded at less than $5 a share in 2020, would fall.

At the end of January Melvin received commitments of $2.75 billion in fresh cash from investors, signaling their confidence in Plotkin's abilities.

Since founding the firm in 2014, Plotkin has been considered one of the industry's most gifted stock pickers, posting an average 30% a year through the end of 2020. In 2020 Melvin Capital gained 53%.

(Reporting by Svea Herbst-Bayliss; Editing by Chris Reese and David Gregorio)

By Svea Herbst-Bayliss