As the investment guru at the nation's biggest mutual fund in 1996, Jeff Vinik dumped $10 billion worth of technology stocks like Nokia and Cisco Systems and poured clients' money into the safety of cash and bonds.
The move inspired an epic collective tongue lashing. Vinik had cashed out right before those stocks began their gadzillion-dollar run up. The financial press fashioned Vinik a dunce cap, and he resigned from the Fidelity Magellan Fund.
Vinik learned a hard lesson while still in his mid 30s: When it came to him making money, safety was for suckers and secrecy was sacred.
No one can accuse Vinik, who'll turn 51 next month, of playing it safe in his latest investment foray. The Bostonian is supposedly close to buying the Tampa Bay Lightning, the region's financially ailing National Hockey League franchise that has struggled to meet payroll.
Hockey sources say Vinik, one of Boston's richest people with a net worth of more than $500 million, will personally cover the purchase price, believed to be somewhere between $100 million and $170 million. Vinik declined to talk to the St. Petersburg Times for this story. He has made it a habit to avoid the press since quitting Fidelity in 1996.
But news reports and former associates describe him as a high-risk, hair-trigger trader who makes most or all investment decisions at Vinik Asset Management, a private hedge fund.
"He's an extremely volatile investor," said Cary Krosinsky, a Columbia University instructor and former hedge fund analyst who followed Vinik's career for years. "He's often been a momentum investor. He sees a trend and gets in before the market recognizes it. When the market recognizes it, he gets out.''
But where does such volatility leave the Lightning, a hockey team desperate for stability after the tumultuous 19-month ownership of Hollywood producer Oren Koules and retired hockey player and real estate entrepreneur Len Barrie?
Vinik would pay tens of millions less than the $200 million Koules and Barrie paid. Forbes magazine placed the franchise's value at $200 million a little more than a year ago, so Vinik would be getting a bargain.
Philip Porter, a University of South Florida economics professor who studies sports business, assumes Vinik's main hedge fund business puts his ownership of the Lightning in a higher risk category.
"Immediately after they bought the soccer team, the economy went south. Their response? They cut the payroll of the Buccaneers. Tampa paid the cost of the Glazers' having made bad investments. We ended up with a poorer football team."
But if Vinik's past is any indication, he's not destined for skid row.
A whiz kid of the financial services industry, he was picked at age 33 to run the world's largest mutual fund, Boston's Fidelity Magellan. Press reports quoted one Fidelity insider as saying Vinik's temperament, unemotional and machine-like, appealed to his bosses.
Vinik had earned an engineering degree at Duke in 1981 and an MBA from Harvard in 1985. His tenure at Fidelity began well in 1992, but he left under a cloud in 1996 to form Vinik Capital Management. Vinik was correct about tech stocks being overvalued. He just happened to bail several years too soon, missing oodles of appreciation for investors who owned his mutual fund.
As head of a hedge fund in downtown Boston, Vinik made amends for previous missteps. His aggressive style earned billions for his clients. Hedge funds are lightly regulated and open to a limited number of wealthy investors who pay high fees in the hopes of higher returns.
Around the year 2000, Vinik refunded his clients. Henceforth, he would invest only his own money and that of his partners and acquaintances.
Two years later, he bought a piece of the Red Sox as part of a money team assembled by principal owner John Henry. The press dubbed him a nonretired retired guy. Money magazine ran a profile of the secretive tycoon:
"Vinik doesn't quite fit the image of the swashbuckling, multimillionaire speculator. .… He's a chubby guy with spectacles and a shy, unassuming manner. He dresses casually, seldom wearing a suit. He prides himself on leaving the office by 5:30 p.m. … He vacations at Disney World with his family. He shuns publicity."
Vinik lives in a $12 million mansion in Weston, Mass., and a $2.6 million, 5,000-square-foot, oceanfront condo inBoca Raton. His wife, Mary "Penny" Vinik, is a former librarian at Fidelity.
The recent stock market teeter totter reinforced Vinik's skill at picking companies. In early 2008, he owned $11.8 billion worth of stock, but slashed his holdings to $1.8 billion before the market crashed that fall.
As the market turned a corner in early 2009, Vinik got back in to the tune of $6.8 billion. But by October, Vinik had purged his portfolio to a relatively bare bones $1.7 billion. Many of his remaining investments were recession buys, including discounters like TJ Maxx, Big Lots, Dollar Tree and Priceline.
Is he placing the Lightning in the same league with the rest of that bargain bin? None of several business associates reached for an interview in Boston would discuss the purchase.
"I think it is advisable that such a conversation follow, not proceed, the acquisition of the team," Red Sox president Larry Lucchino said in an e-mail.
Porter, the USF professor, says the nation's tax code discourages long-term team ownership.
"There's now a revolving door of owners. The IRS has declared that when you buy a sports franchise, you buy a set of players that wear out like you've bought an oil well that's running out. You can deduct half a team's value over five years," he said. "After five years that advantage is gone, and you sell to someone else."
Krosinsky floated another possibility. Like Malcolm Glazer, who brought his sons into sports management, Vinik might build a legacy for one or more of his four children.
Vinik's college-age son Daniel is a sports fan. His catch of a foul ball in the 2007 postseason, a catch that interfered with the opposing team's catcher reaching into the stands, helped the Red Sox win a crucial playoff game.
"You could see how it could turn into a long-term investment," Krosinsky said. "Hockey becomes a gift to his son and his son's future career.''