Meme-Stock Casualty Plotkin Joins Rich Shifting Assets Into ETFs

Hedge fund manager turned NBA owner Gabe Plotkin, who shut his firm after a bruising showdown with meme-stock traders, is planning to convert some of his own assets into an ETF using a tactic that’s helped a slew of wealthy investors defer tax.

The co-chairman of the Charlotte Hornets will provide the majority of initial securities for the Snowball ETF, according to two people familiar with the matter who asked not to be identified because the information is private. The exchange-traded fund, a filing for which was first made in December, is set to be created via what’s known as a 351 conversion, the people said. That’s a process to turn an existing portfolio of assets into an ETF, a practice that’s been booming on Wall Street because of its potential tax advantages.

Plotkin declined to comment.

The money manager was thrust into the spotlight during the 2021 retail-trading boom when his hedge fund, Melvin Capital Management, lost more than half its value betting against meme stocks — an episode dramatized in the film Dumb Money.

An army of individual investors that had emerged during the pandemic worked together to drive up the prices of heavily shorted names like GameStop Corp. and AMC Entertainment Holdings Inc., and Melvin was positioned for declines in both. The hedge fund’s massive losses ultimately led to the closure of a firm that had once managed about $13 billion, having earned a reputation as one of the most successful names on Wall Street with annualized returns of roughly 30% for half a decade.

Plotkin returned to the headlines in 2023, when he led a group that bought Michael Jordan’s majority stake in the Hornets.