After closing his hedge fund in the aftermath of the meme-stock upheaval, Gabe Plotkin is exploring a new investment structure, according to Bloomberg.
He’s looking to place a portion of his personal holdings into an exchange-traded fund, using a method that has become increasingly attractive for wealthy investors seeking to postpone capital gains taxes.
As co-chair of the Charlotte Hornets, Plotkin is expected to contribute most of the starting assets for a proposed vehicle called the Snowball ETF, according to people familiar with the plans. The fund—initially filed late last year—would be built through a “351 conversion,” a mechanism that allows an existing basket of investments to be transferred into an ETF format. This approach has gained popularity because it can offer tax deferral along with the flexibility and liquidity associated with ETFs.
Bloomberg reports that he first drew widespread attention during the 2021 retail-trading frenzy, when his firm, Melvin Capital Management, suffered major losses from bets against so-called meme stocks. Retail investors, many coordinating online during the pandemic, pushed up shares of companies like GameStop Corp. and AMC Entertainment Holdings Inc.—positions Melvin had expected to fall. The resulting losses forced the closure of a fund that had once managed roughly $13 billion and delivered strong returns for years.
Plotkin resurfaced in the news again in 2023 when he helped lead the purchase of Michael Jordan’s majority stake in the Hornets.
The strategy behind the new ETF relies on a provision in the tax code—Section 351—that allows investors to contribute appreciated assets without immediately triggering taxes. Once inside the ETF, those holdings can be rebalanced more efficiently, potentially reducing future tax burdens while also benefiting from the tradability of the ETF structure.
Some of the assets expected to seed the Snowball ETF reportedly carry unrealized gains. The fund is targeting a launch window of late this year or early 2027 and will pursue a focused, actively managed equity approach under Plotkin’s leadership at Snowball Advisors.
Across Wall Street, strategies designed to minimize taxes—often grouped under the idea of “tax alpha”—are gaining momentum. Among them, 351 conversions have stood out for their rapid adoption, drawing increasing attention from regulators as their use expands.