Vinik to shut down hedge fund, says raising cash 'much harder' than expected

[October 24, 2019]  By Svea Herbst-Bayliss

BOSTON (Reuters) - Money manager Jeffrey Vinik said on Wednesday he was shutting down his stock-picking hedge fund, citing unexpected difficulties raising cash for the decision to end a much-hyped but short-lived relaunch of his asset management firm.

"Simply put, it has been much harder to raise money over the last several months than I anticipated," Vinik wrote in a letter to investors seen by Reuters, relaying his decision to shut down the portfolio on Nov. 15, 2019.

While the fund's performance was good, gaining a net 4.8% this year, it was not strong enough to attract fresh waves of capital, Vinik said in an interview. "I thought I could have 30 to 40 meetings in New York and fly home with commitments for $3 billion, but there is no sign of new money coming in," he said.

The 60-year-old investor, who once ran Fidelity's flagship Magellan Fund and in 1996 launched a hedge fund that oversaw $10 billion at its peak, announced his return in January. He had planned to raise as much as $3 billion, and reminded potential investors he had survived many economic cycles.

It had been six years since Vinik shut down the previous fund and he had been itching to get back in the game. He missed the markets and competing with the world's biggest institutional investors, Vinik told Reuters in a January interview.

Other hedge funds had taken their eye off the ball, Vinik said as he prepared to sell his story to pension funds and wealthy investors. Two decades ago, his reputation was so strong that Vinik Asset Management pulled in $800 million on its first day, enough to stop further fund raising immediately.

But times have changed. After scheduling dozens of meetings, Vinik in February offered potential clients fee cuts to drum up support fast. He also sought to temper expectations by saying it was no longer possible to raise $3 billion by March 1. Indeed, he had raised only $465 million at that time, according to a document filed with the Securities and Exchange Commission.

Vinik said he had planned to run the fund for five years, until he turned 65, but acknowledged that it made little sense to carry on now. He will be helping his staff find new positions, he said, and has not decided whether he will continue to invest his own fortune day to day.

The Wall Street Journal first reported news of the imminent demise of the fund run by Vinik, who owns the Tampa Bay Lightning hockey team.

Vinik is not alone in deciding to shut down his firm. In August, Hoplite Capital announced plans to close after sluggish returns.

Previously, Tourbillon Capital Partners also announced plans to shutter while Highfields Capital Management and Omega Advisors told clients they would stop managing outsiders' money to become family offices, investing mainly their founders' money.

(Reporting by Svea Herbst-Bayliss; Editing by Tom Brown)

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