Jeff Vinik founded Vinik Asset Management in 1996 after spending 4 years managing Fidelity Magellan Fund. During his time at Fidelity, Vinik averaged 17% annual returns. As impressive as that is, he more than tripled during his first four years at Vinik Asset Management. In 2000, Vinik decided to return all his clients’ money and close the doors of Vinik Asset Management. He announced his intention to use the fund to manage his personal wealth.
Since then, Jeff Vinik has bought interests in the Tampa Bay Lightning (NHL), the Tampa Bay Storm (AFL), the Boston Red Sox (MLB) and the Liverpool Football Club (Premier League); he has also grown his personal hedge fund to over $8.9 billion. While the fund is not 100% his own money, according to Bloomberg, Vinik Asset Management includes Vinik’s own capital as well as his friends, family and select friends, like the eminent George Soros (Check it out).
Jeff Vinik has always outpaced the S&P 500 but lately he has only bested market performance marginally. For instance, Vinik’s positions lost 9.8% since June compared to 10.7% loss for the SPY. This difference of less than one percentage point would not make it worthwhile for an individual investor as transaction costs would erode most of the value.
Jeff Vinik’s strongest returns since the end of the second quarter were in the popular commodity SPDR Gold Trust (GLD). The gold ETF gained 26% since the end of June. Several other hedge fund managers hold significant positions in the company, including John Paulson of Paulson & Co who owns a position worth almost $4.6 billion in the commodity (Paulson’s top stock picks).
Jeff Vinik also earned decent returns through his technology positions – specifically 11% in Apple Inc (AAPL) and 4% in Google Inc (GOOG). Apple is Jeff Vinik’s largest position after increasing his position in the company by 43% last quarter.
Of Vinik’s top 25 stock picks, several stocks had significant negative returns. Starwood Hotels (HOT) lost -25%. The hotel company is a favorite of Bridger Management’s Robert Mignone (Roberto Mignone’s top picks), as is SPDR Gold Trust. Jeff Vinik’s Vinik Asset Management also lost big on PNC Financial (PNC), losing -21% on the finance company.
We like Jeff Vinik but mirroring Vinik Asset Management’s entire portfolio won’t be right for some investors. Jeff Vinik has had a fair amount of success in his career but the ultra-private hedge fund manager is decidedly unorthodox in many of his investing moves, even by his own admission. For some individual investors, the risk may be too great. Nevertheless, we believe investors can beat the market by focusing on Jeff Vinik’s top stock picks. Vinik Asset Management’s top two stock picks managed to beat the market since June.
