Melvin Capital, hedge fund torpedoed by the GameStop frenzy, is shutting down.

The New York Times reviewed a letter sent to investors by the hedge fund that said it was shutting down.

The appropriate next step was to liquidate the fund's assets and return cash to all investors, according to a letter written by Mr. Plotkin to his investors.

Mr. Plotkin wrote that he needed to step away from managing external capital.

Mr. Plotkin had bet that shares of AMC Entertainment and other mall mainstays from the 1990s would fall as their businesses shrank.

Instead, the stocks went up when amateur investors, who were determined to outsmart big Wall Street funds, kept buying up shares and prop up their price.

In January 2021, when it had $8 billion in assets under management, it lost billions of dollars as it scrambled to cover its short positions. The hedge funds Point72, run by Mr. Cohen, and Citadel, as well as fresh capital from new investors, propped it up.

Mr. Plotkin contemplated reconstituting his fund before he decided to close it. Mr. Plotkin's reputation has been hurt by the decision to close Melvin. He was one of the most successful portfolio managers to emerge from Mr. Cohen's former hedge fund.

The news of the closing of the store was reported by Bloomberg.