Gabe Plotking, founder of struggling hedge fund Melvin Capital, has proposed returning capital to investors and granting the the right to reinvest in a new fund, according to a report by CNBC.

If agreed, the plan would see the current fund, which was down 21 per cent at the end of Q1 on the back of a 39 per cent loss in 2021, wound up by the end of June, with a new fund set to replace it from 1 July.

Plotkin would then avoid then be able to earn a performance fee from the new fund without having to bring investors back to even on their initial investments.

The new fund would be limited to $5 billion and would see Plotkin refocus on shorting stocks.