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Vinik in talks with Soros
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August 1, 1996: 7:49 a.m. ET
Report says former Magellan chief could manage $1 billion for Soros
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NEW YORK (CNNfn) -- Jeffrey Vinik, the deposed head of Fidelity Investments' Magellan mutual fund, is reportedly in preliminary talks with Soros Fund Management about managing as much as $1 billion of the hedge fund's money.
The Wall Street Journal said Thursday that Vinik is expected to meet with representatives of the Soros firm this week. Soros is run by hedge-fund king George Soros. A Vinik-Soros alliance would unite two of the most prominent names in high-stakes investing.
Until June, Vinik was at the helm of Magellan, steering the nation's largest mutual fund. But following a poorly-timed bet on Treasury bonds and a move out of equities, Vinik was pressured to resign. He has since been drumming up support for his own money-management firm, Vinik Asset Management.
Neither Vinik nor Soros representatives would comment on the discussions.
Citing sources familiar with the situation, the Journal said Vinik would be a good match for Soros, who is looking to boost profits after suffering from a subpar year. His biggest fund, the $5 billion Quantum Fund, rose just 5.7 percent in the first half of 1996 and is believed to have retreated since. The fund returned a more typical 40 percent last year after fees.
Hedge funds makes investments in order to reduce the risk of adverse price movements in a security, commodity or currency. It is a high-risk style of investing that can have big rewards. Soros, for example, made more than $1 billion when Great Britain pulled its currency out of the European Rate Mechanism in 1992, causing the pound to shed value.
The newspaper said the Soros firm might want to give Vinik up to $1 billion to manage. In exchange, Vinik would either give the firm a large share of his trading profits or a stake in his money-management business. Such an arrangement would give Vinik a bigger asset base, allowing him to develop his business with the support of a world-class investor. 
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