Billionaire Jeff Vinik’s Stock Picks and 10-Year Performance
In this piece, we will take a look at billionaire Jeff Vinik's stock picks and 10-year performance. If you want to skip our introduction to the investor, his background, and how some investments have performed over the year, then head on over to Billionaire Jeff Vinik's Top 5 Stocks.
Jeff Vinik has a short history in the hedge fund industry. He set up his fund first in the 90s and then shut it down later after making remarkable returns. Then, he tried setting up his fund again but shut it down in less than a year after citing difficulties in raising capital. A graduate of Harvard University, he is known primarily for running one of the biggest mutual funds in the U.S. and then starting his own hedge fund called Vinik Asset Management.
Both of these earned him his fair share of fame in the finance industry. Under Mr. Vinik's management, the Fidelity Magellan Fund earned quite a bit of controversy as he was criticized for moving the fund's money away from attractive technology stocks into bonds. This was the time when semiconductor stocks (which are all the buzz these days) were in their early phases of their stock market presence. This was also the time when investing in mutual funds - especially by folks who were using their personal savings - was peaking, as 3 million Americans had piled $3 trillion into the industry.
At Magellan, Mr. Vinik created quite a bit of controversy when it came to light that he had sold large portions of the fund's holdings in semiconductor stocks at a time when the shares were peaking. The semiconductor sector is well known for its cycles of ups and downs, with the latest one undergoing right now as chip makers wait while chip designers' product inventory is digested in the retail chain. Back in the early 1990s, Taiwan and South Korea were rising in stature in the chip world (these two now have some of the most important chip companies in the world). The start of the decade was marked by a strong performance from the Asian firms, but America, which was still a global chip manufacturing base back then, was struggling from an economic contraction in the wake of Iraq's invasion of Kuwait, high inflation, and high interest rates (the economy is also experiencing somewhat similar conditions over the past year or so).
This crunch created the perfect conditions for a boom in 1995 and the subsequent slowdown which was also reflected in the stock market. Just as all this was happening, Mr. Vinik had written to investors of the Magellan Fund that chip firms, such as Micron Technology, Inc. (NASDAQ:MU) were solid investments. This was in a letter that was mailed in November as part of the fund's semiannual report. However, controversy surfaced when the Washington Post reported that Mr. Vinik had actually started selling Micron shares in October and before investors received the letter. This selloff was part of a broader exit from the technology sector with other stocks also being sold. Less than a year after his decision, he would quit Magellan and set up his own hedge fund, with some speculating that the increased scrutiny from 1995 contributed to him leaving Fidelity.
Vinik Asset Management would go on to make a big impact in the hedge fund industry right off the bat. In the first year, the hedge fund's return would sit at a whopping 93.8% and then go on to an average of 48% for five years. After this burst of performance, Mr. Vinik would return $4.2 billion to investors and close the fund to outside investment in 2000. He would, however, try to open up his hedge fund twice again, first in 2005 and then in 2019. The first run would be quite successful as Vinik Asset Management would go on to operate for nearly eight years before a downturn in gold stocks and other factors would make it return capital. The second run was short lived, with Mr. Vinik explaining that it had become difficult to raise capital.
So, today we'll take a look at how his long term investments would have performed ten years after Vinik Asset's final serious foray into the stock market. Some firms that would have performed well are eBay Inc. (NASDAQ:EBAY), Lennar Corporation (NYSE:LEN), and Marriott International, Inc. (NASDAQ:MAR).
Our Methodology
To compile our list of Jeff Vinik's long term stock performance, we first listed his fund's top twenty investments during the first quarter of 2013, which is the latest data available. Then, their returns over the past ten years (between April 2013 and July 2023) were calculated, and the companies are listed below. Some firms he had invested in in 2013 have either been acquired or delisted, and they have been excluded.
Billionaire Jeff Vinik's Stock Picks and 10-Year Performance
16. NovaGold Resources Inc. (NYSE:NG)
10 Year Gains: -56%
NovaGold Resources Inc. (NYSE:NG) is a Canadian gold firm with operations primarily in Canada. Vinik Asset Management owned nearly 18 million shares of the firm in 2013, and the shares have dropped by more than half since then.
By the end of this year's first quarter, 13 of the 943 hedge funds part of Insider Monkey's database had held NovaGold Resources Inc. (NYSE:NG)'s shares. Out of these, the largest investor is John Paulson's Paulson & Co with a $138 million stake.
15. International Paper Company (NYSE:IP)
10 Year Gains: -26%
International Paper Company (NYSE:IP) is an American firm that has been in business for more than a century. It makes and sells packaging, paper, and associated products. Mr. Vinek's fund owned 1.3 million shares of the company in 2013, and the shares have dropped by quite a bit since then. No wonder the stock is rated Hold on average, but there are some believers out there that have rated the shares as Strong Buy.
After sifting through 943 hedge funds for their Q1 2023 shareholdings, Insider Monkey discovered that 25 had owned a stake in the firm. International Paper Company (NYSE:IP)'s largest investor in our database is Edgar Wachenheim's Greenhaven Associates with an investment of $229 million.
14. Barrick Gold Corporation (NYSE:GOLD)
10 Year Gains: -23%
Vinek Asset had owned Barrick Gold Corporation (NYSE:GOLD)'s shares that were trading under the ticker NYSE:ABX. The firm changed the ticker after a merger in 2018, and the shares are down 23% since Mr. Vinek's hedge fund last owned them. The average stock recommendation is a Buy though, and there's a nice upside of $6 as well.
By the end of 2023's first quarter, 41 of the 943 hedge funds part of Insider Monkey's database had invested in Barrick Gold Corporation (NYSE:GOLD). Jean-Marie Eveillard's First Eagle Investment Management is the largest shareholder through a $785 million stake.
13. Kinross Gold Corporation (NYSE:KGC)
10 Year Gains: -21%
Kinross Gold Corporation (NYSE:KGC) is a gold company with a global operations base. The shares have performed quite well over the past month, as they are up by more than 7%. However, over the past ten years, the stock is down 21%.
After sifting through 943 hedge funds for their March quarter of 2023 shareholdings, Insider Monkey discovered that 26 had bought the firm's shares. Kinross Gold Corporation (NYSE:KGC)'s largest hedge fund investor is Jim Simons' Renaissance Technologies with a $123 million stake.
12. Agnico Eagle Mines Limited (NYSE:AEM)
10 Year Gains: 36%
Agnico Eagle Mines Limited (NYSE:AEM) is another gold company with operations in different continents. It is also one whose shares are up 36% since Vinik Asset Management invested in them back in 2013. The firm owned 1.3 million shares worth $65 million.
As of March 2023, 42 of the 943 hedge funds polled by Insider Monkey had invested in Agnico Eagle Mines Limited (NYSE:AEM). Out of these, the biggest shareholder is Jean-Marie Eveillard's First Eagle Investment Management with an investment of $318 million.
Along with Lennar Corporation (NYSE:LEN), eBay Inc. (NASDAQ:EBAY), and Marriott International, Inc. (NASDAQ:MAR), Agnico Eagle Mines Limited (NYSE:AEM) is a great Jeff Vinik stock pick.
11. Cameco Corporation (NYSE:CCJ)
10 Year Gains: 57%
Cameco Corporation (NYSE:CCJ) is a uranium company that mines the mineral and then processes it into fuel for power generation. In a bullish tone for nuclear energy, its shares are rated Strong Buy on average and have an upside of more than $4.
49 of the 943 hedge fund portfolios studied by Insider Monkey had held a stake in the firm by the end of this year's first quarter. Cameco Corporation (NYSE:CCJ)'s largest hedge fund investor is David Rosen's Rubric Capital Management since it owns 4.6 million shares that are worth $122 million.
10. Wheaton Precious Metals Corp. (NYSE:WPM)
10 Year Gains: 68%
Wheaton Precious Metals Corp. (NYSE:WPM) is a Canadian mining company that produces gold, silver, and other precious metals. Vinik Asset Management owned 1.6 million shares of the company under its previous name Silver Wheaton Corp in 2023.
As of March 2023, 29 of the 943 hedge funds part of Insider Monkey's database had bought and owned Wheaton Precious Metals Corp. (NYSE:WPM)'s shares. Out of these, the biggest investor is Jean-Marie Eveillard's First Eagle Investment Management with a stake worth $977 million.
9. Valmont Industries, Inc. (NYSE:VMI)
10 Year Gains: 102%
Valmont Industries, Inc. (NYSE:VMI) is an American industrial equipment company that sells products for agricultural, transportation, and telecommunications use. Mr.Vinik's hedge fund had owned 359,580 shares of the firm in 2013, and these would have nearly doubled in value since then had the firm continued to operate.
Insider Monkey dug through 943 hedge funds for their Q1 2023 shareholdings and discovered that 28 had invested in the firm. Valmont Industries, Inc. (NYSE:VMI)'s largest hedge fund shareholder is Ian Simm's Impax Asset Management through its $197 million investment.
8. CarMax, Inc. (NYSE:KMX)
10 Year Gains: 103%
CarMax, Inc. (NYSE:KMX) is an American retailer that sells used cars. It has operations in more than 40 U.S. states and ranked 9th in Vinik Asset Management's portfolio. The shares have gained 103% in value since 2013, but are down quite a bit since their 2021 high of nearly $150.
Out of the 943 hedge funds part of Insider Monkey's first quarter of 2023 database, 38 had bought CarMax, Inc. (NYSE:KMX)'s shares. Ric Dillon's Diamond Hill Capital is the largest shareholder through a $344 million stake.
7. Toll Brothers, Inc. (NYSE:TOL)
10 Year Gains: 130%
Toll Brothers, Inc. (NYSE:TOL) is a real estate firm that builds and sells a variety of different kinds of properties for residential and commercial use. Vinik Asset Management had held a small $56 million stake in the firm in 2013, which would have been worth more than $100 million today.
As of March 2023, 37 of the 943 hedge funds profiled by Insider Monkey had bought and owned the firm's shares. Toll Brothers, Inc. (NYSE:TOL)'s largest shareholder is Edgar Wachenheim's Greenhaven Associates with an investment of $320 million.
6. Packaging Corp of America (NYSE:PKG)
10 Year Gains: 192%
Packaging Corp of America (NYSE:PKG) makes container-boards, white paper, and other associated products. Mr. Vinik's hedge fund owned 1.1 million shares of the firm that were worth $52 million in 2013.
By the end of 2023's first quarter, 18 of the 943 hedge funds part of Insider Monkey's database had held a stake in Packaging Corp of America (NYSE:PKG). Cliff Asness' AQR Capital Management is the largest investor with a $28 million stake courtesy of just 209,210 shares.
eBay Inc. (NASDAQ:EBAY), Packaging Corp of America (NYSE:PKG), Lennar Corporation (NYSE:LEN), and Marriott International, Inc. (NASDAQ:MAR) are some hot stocks that have done well over the past decade.
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Disclosure: None. Billionaire Jeff Vinik's Stock Picks and 10-Year Performance is originally published on Insider Monkey.