Vinik Asset Management, The Investment Firm That Isn't

Jeff Vinik, founder of Vinik Asset Management, still is not in the investment management business after closing his firm's doors and giving clients their money back eight years ago. At least, that is what the spokespeople for Vinik Asset Management continue to tell curious potential customers. Jeff Vinik was once the manager of the giant mutual fund Fidelity Magellan before leaving in 1996 to found Vinik Asset Management. However, in 2000 the firm closed its doors and planned to return $4.2 billion to clients.

The latest financial reports tell a different story however. Though Vinik Asset Management got out of the actual hedge fund business, the actual organization did not disappear. The firm remained in operation for its principals to invest their own money as well as the accounts of friends and family. Now, in 2008, filings with the Security and Exchange Commission reveal that VAM is currently managing more money than ever while it was "in business."

Despite that, Jeff Vinik remains hard to contact and the firm maintains that is not actively seeking new clients. That is getting harder to swallow all the time. These reports show Vinik, and four other managers at his Boston based hedge fund firm were investing $9.5 billion in stocks on March 31, 2008. A portfolio managed by Vinik alone accounted for $6.8 billion of the total.

In the early years after the "closure" relatively small amounts of money were traded infrequently and often invested in mutual funds. Over time, the amount of money reported each quarter grew, and the trading activity quickened. More recently, the firm's assets grew by nearly 50 percent, from $6.4 billion, in the first three months of this year. The firm's reported assets were below $2 billion as recently as the middle of 2006.

Public reports on hedge fund portfolios can be misleading because of all the details they do not include. A hedge fund firm may have borrowed heavily to create its stock portfolio, a fact that is not disclosed or described. Short positions, or bets against individual stocks, are not reported either. Neither are most other kinds of investments that do not involve stocks. The real size of a hedge fund operation could be considerably larger or smaller than it appears in its quarterly disclosure report. But firms like VAM still own the stocks they report in their portfolios every three months. Whatever the true size of Vinik Asset Management, it is more assuredly "not open for business."