A backlash from investors has prompted struggling hedge fund Melvin Capital Management to ditch plans to start charging performance fees again despite incurring heavy losses, according to a report by The Wall Street Journal.

Melvin Capital boss Gabe Plotkin last week wrote to investors outlining a plan to effectively launch a new slimmed down $5 billion fund to replace the firm's original fund and reinstate performance fees, despite investors sitting on a 51.8 per cent loss in the first three months of the year.

Plotkin is quoted as saying: “I am sorry. I got this one wrong. I made a mistake. I apologise. Some of you (investors) feel that we were not being a good partner. Upon reflection, you are right.”