Saturday, December 16, 2017
Business

Lightning owner Vinik closing his hedge fund

Tampa Bay Lightning owner Jeff Vinik is closing his Tampa-based hedge fund and returning billions of dollars to investors after a rash of disappointing results.

In a letter to investors Friday, Vinik said he will return all of Vinik Asset Management LP's capital to outside investors by the end of June. He'll focus his energy on the Lightning hockey team and his charitable foundation, he said.

"This decision is mainly driven by (founding partner) Mike (Gordon) and me," he wrote. "While we both love competing with the market day in and day out, it is time for us to take a break."

Vinik, who has emerged as a major bay area philanthropist and civic activist since buying the Lightning in 2010, was not available for comment Friday. Lightning officials, however, said the decision is not expected to impact management of the Lightning nor its home venue, the Tampa Bay Times Forum.

Rather, the decision frees up Vinik to give more attention not just to the hockey team and charity but also to his real estate ventures, Lightning executives said.

Vinik, whose net worth is estimated at about $500 million, has been particularly active as a real estate investor in Tampa's Channel District. He recently pulled out of a bid to buy and redevelop the troubled entertainment complex known as Channelside Bay Plaza. However, he still controls a large swath of real estate around the Times Forum and could play a pivotal role in downtown Tampa redevelopment.

In his letter to investors, Vinik said it was a "difficult decision" to close the fund after a rough 10-month stretch under a new investment team. Vinik had moved the headquarters of his fund from Boston to Tampa last summer, leasing the 31st floor of the SunTrust Financial Centre building in downtown Tampa.

According to a Dow Jones report, the drop in the fund's value came in part because of the new investment team's big bet on gold mining. The fund has lost nearly 5 percent since the restructuring, down 5.3 percent in April alone.

In his letter, Vinik said his company was still proud of an "excellent long-term record of 17 percent annualized returns" since the fund was launched in 1996.

There are many types of hedge funds. Unlike mutual funds, they're typically created as more targeted vehicles for wealthy investors to capitalize on bets on certain industries or market movements up or down. It's not unusual for hedge funds to have a lifespan of only a few years; in fact, it's rare they last more than 10 years.

Vinik, 54, rose to fame in the 1990s as the manager of Fidelity Investments' Magellan fund, then the largest actively managed mutual fund in the country.

He carved a reputation for making large investment swings pay off. But not all his moves worked out. In late 1995, he shifted much of the Magellan fund's investment out of stocks and into bonds, an ill-timed move that backfired as the markets gained strength.

A year later, he started his own hedge fund, but it only lasted about four years. In 2000, in shutting down what was then a $4.2 billion Boston fund, he said he wanted to spend more time with his young family.

Vinik's relaunched hedge fund had about $7.6 billion in assets under management when he announced plans to move its headquarters to Tampa last year. In recent months, fund investors have asked to pull out about $1.5 billion citing concern over poor performance, according to an earlier Wall Street Journal report.

Three portfolio managers for Vinik Asset Management plan to start up their own equities hedge fund based in Boston.

Jeff Harrington can be reached at [email protected] or (727) 893-8242.

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