Stock Market

Melvin Capital’s liquidation may have been the mystery catalyst behind Wednesday’s plunge in stocks

It wasn’t just Target’s off-target results that blasted U.S. stocks on Wednesday, when the stock market as tracked by the S&P 500 had its worst day in nearly two years.

The liquidation of Melvin Capital also played a major role, says Tom Hayes, chairman and managing member of Great Hill Capital.

The $7.8 billion fund is shutting down, the firm announced late Wednesday. “The thing about a liquidation is that you don’t send the letter until AFTER you’ve done the selling or the vultures will come in and pick you off like a super slow ‘warrior’ at a paintball park,” said Hayes.

Melvin Capital’s 13-F filing shows the top holdings at the end of the first quarter.

Ticker

Name

YTD performance

LYV,
-0.35%
Live Nation Entertainment

-29%

HLT,
-4.75%
Hilton Worldwide

-18%

AMZN,
-7.16%
Amazon.com

-36%

DDOG,
-7.34%
Datadog

-51%

BILL,
-6.22%
Bill.com

-59%

MSFT,
-4.55%
Microsoft

-24%

EXPE,
-2.18%
Expedia

-34%

V,
-1.97%
Visa

-8%

RACE,
-4.78%
Ferrari

-29%

MAR,
-6.58%
Marriott International

-7%

“If you were wondering why Amazon, Expedia and Uber
UBER,
-7.19%

were selling off like they were going out of business – when the exact opposite is true (they are leaders in their fields), now you know,” says Hayes.

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The so-called Tiger cubs, including Tiger Global, have also been under pressure this year, with Tiger Global losing an estimated $17 billion. Hayes adds the Tiger cubs moved at once in April and early May to sell their technology holdings.

“The acute pain is now likely in the rear view mirror now that the source of the clog has been revealed. We may get a few aftershocks, but the cat is out of the bag at this point,” Hayes adds.

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