Vinik charity’s market-beating trades recall hedge-fund heyday
JEFF Vinik’s investing skills have faded from view since he unwound his hedge fund in 2013, but they are still getting lots of use.
The real estate developer and owner of the Tampa Bay Lightning hockey team revealed billions of dollars of trading in the stock market – only now it’s being done through a family philanthropy that is scoring the same kind of robust returns his hedge fund once did.
Vinik’s active trading is unusual in the staid world of charitable foundations. Using just a sliver of its capital, the Vinik Family Foundation traded US$ 1.9 billion of public securities during 2015, realising US$ 6.7 million ( RM30 million) in gains, according to the latest available federal tax documents requested from the IRS by Bloomberg and posted last month. The profits were enough to cover most of the foundation’s donations that year and enabled it to beat the broad stock market.
“They are buying a whole bunch during the year and they are turning it over a bunch,” Brian McAllister, an associate professor of accounting at the University of Colorado’s graduate school of business administration, said after reviewing the tax documents. “It could be one indication of highvelocity trading.”
After announcing in May 2013 that he would return outside capital, Vinik converted his fund company into a family office and began focusing on projects tied to his home base in Tampa, Florida, ranging from gifts to local charities to a US$ 3 billion development project in partnership with Bill Gates’s Cascade Investment. But Vinik told the Boston Globe two years ago that giving up his moneymanagement career “was a very hard decision,” adding, “I really do miss the markets.”
The Vinik Family Foundation doesn’t comment on its investment activities and strategies, spokesman Bill Wickett said in an emailed statement. The foundation is “proud to publicly support several community initiatives inside and outside of Tampa Bay,” Wickett said. “We look forward to maintaining our support of deserving charities and non-profits.”
Instead of trading directly, wealthy managers such as John Paulson, Seth Klarman and Steven Cohen tend to invest the assets of their family foundations in either their own funds or those run by third parties, the most recently available tax documents show.
Vinik has taken a similar approach for part of his foundation’s portfolio: At the end of 2015, it had US$ 189.5 million of assets, two-thirds of which was invested in roughly 25 funds run by outside managers including Bill Gross, Andy Hall and Jason Karp. More than half of the 25 investments were valued below cost, according to its filing.
Separately, the foundation had a portfolio of publicly traded securities that employed about $ 30 million to US$ 50 million of capital, according to an estimate by from Arthur Brown, a hedge-fund accounting expert at Marcum LLP who reviewed the tax documents on behalf of Bloomberg News. This public portfolio did US$ 1.2 billion of trading in 2014 and US$ 1.9 billion the following year.
Vinik, 57, may also still be making the macro calls that defined his earlier career, first at the Fidelity Magellan Fund and then his own hedge-fund firm.
The foundation’s publicly traded portfolio consisted of only about US$ 5.4 million of stocks at the end of 2015, compared with US$ 30 million in a cashlike instrument and US$ 15 million in a fund dedicated to long-term US Treasuries. It also had US$ 36 million of bets that benchmarks such as the S& P 500 Index would decline, leaving it well-positioned for the selloff that caught many hedge-fund managers off- guard in January 2016. — WP-Bloomberg