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Tampa Bay Lightning

Lightning’s Vinik to shut down hedge fund, return money to investors

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Published:   |   Updated: May 3, 2013 at 06:20 PM
TAMPA -

Lightning hockey team owner Jeff Vinik is shutting down the hedge fund that he manages from Tampa, and is returning remaining money to his outside investors.

Lightning officials confirmed the closure, and said the move should have no impact on the team or operations at the Forum where they play, while several fund managers that worked with Vinik plan to start up their own investment companies.

Vinik wrote a letter to investors Friday, saying that while he and his partners “love competing with the market day in and day out, it is time for us to take a break.”

This is the second time in a remarkable stock-picking career where Vinik has quit a fund after making bets that turned south just as the stock market was reaching huge highs.

The move raises a host of questions about Vinik’s role in the Tampa area, and his hopes for the hockey team and his family’s charitable works. Vinik himself was not available for comment on Friday. Instead, Lightning officials issued a statement.

“This will allow Mr. Vinik to better focus on his most important priorities moving forward: family, the Vinik Family Foundation and his Tampa Bay interests,” said Lightning spokesman Bill Wickett. “Those include Tampa Bay Sports and Entertainment and its entities, real estate development opportunities in the Channelside District and philanthropy.”

Benefactor

It’s not uncommon in the high-stakes world of Wall Street hedge funds for companies to shut down and return proceeds to investors. But it’s a stark shift in Tampa for Vinik, who only came to the local scene recently and quickly became a philanthropic benefactor and sports mogul.

Vinik started his own fund in 1996 in Boston after a celebrated turn running the Magellan Fund at Fidelity Investments, then the largest actively managed mutual fund in the United States. Unfortunately, some of his larger investments there turned negative, just as the tech boom was starting to take off.

Vinik left to start his own fund, and in 2006, Boston magazine estimated his net worth at $515 million.

A longtime sports fan and partial owner of the Boston Red Sox, Vinik in early 2010 bought the Tampa Bay Lightning hockey team, and soon moved himself, his family and his fund from Boston to Tampa, renting office space on the 31st floor of the SunTrust tower, and building homes for himself and his extended family in Palma Ceia.

Vinik started donating to scores of causes, ranging from small donations to high schools, to larger roles with the Tampa Museum of Art. His wife Penny is now on the board of the Tampa Museum of Art, a role that typically comes with sizeable support for the museum.

The most currently available documents from the Vinik Family Foundation date from 2011, just as the couple was moving to Tampa, and list $9.5 million in donations in Boston and the Tampa Bay area, including $1 million to the Tampa Bay Host Committee, $12,500 to the Tampa Museum of Art and $2 million to the Tampa Bay Lightning Foundation.

More recently, Vinik has taken ownership stakes in land around the Forum, and put in a bid to take over the struggling Channelside Bay Plaza shopping center there – laying out a vision for renovating the entire neighborhood.

Many of Tampa’s political players have mentioned Vinik and his work in the Channel District area as a potential trigger to bring the Tampa Bay Rays baseball team to Tampa from St. Petersburg.

Much of that talk cooled last October after Vinik pulled back his Channelside bid, citing legal hurdles with the property.

Fund

In a letter sent to investors Friday, Vinik said he was proud of the 17 percent annualized return with his VAM fund. “The last 10 months have been more difficult,” Vinik wrote, with the fund’s net value falling 4.8 percent since July last year.

Typically hedge funds are considered relatively higher risk investments that are expected to return outsized profits for investors.

Investors in hedge funds can sometimes deposit and withdraw money over time, but federal filings over the last few years show a picture of a fund varying in total value. The fund listed $8.9 billion in securities under management in June 2011 according to one calculation from documents filed with the Securities and Exchange Commission, but by February this year it had $3.4 billion under management.

Gold

One reason for the fund’s struggles could be large bets on gold mining and gold-related companies. Though gold prices skyrocketed during the worst of the financial crisis in 2008 and 2009, prices have retreated since then as investors gain more confidence in the American economy.

A February 14 filing with the Securities and Exchange Commission by VAM is a snapshot in time of the fund’s holdings, but it lists tens of millions of dollars in holdings in companies such as Allied Nevada Gold Corp., Agnico Eagle Mines, Anglogold Ashanti Ltd., Aurico Gold, Barrick Gold Corp., Goldcorp Inc., Kinross Gold Corp., Novagold Res Inc., Royal Gold Inc. and Yamana Gold Inc.

Vinik also made significant bets by buying stock in scores of retail stores, including brands that have had relatively flat stock prices such as Abercrombie & Fitch , Bed Bath & Beyond and Dollar General Corp. It also lists a $91.9 million investment in BestBuy, which has struggled for several years.

By June 30, Vinik said the fund would sell off its equity holdings and return cash to investors.

Several portfolio managers with Vinik’s company plan on starting up their own funds, based in Boston. Others, including Dave Iben and Gerry Coughlin, plan to start their own operations, potentially in the Tampa offices of VAM, the letter said.

Friday, Vinik sent an internal memo to employees of the Lightning, thanking them for work during a shortened hockey season, and saying his decision to shut down the fund was “largely due to my partners and my interest in pursuing more time for other emerging priorities.  For me those priorities are right here in Tampa Bay and focused on my family, our team and the development of a world class enterprise in this community.”

He continued, saying there would be meetings next week with employees where he would lay out “my vision of our progress in building that world class organization.”


rmullins@tampatrib.com (813) 259-7919 Twitter: @DailyDeadline

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