Magellan Fund finds itself in turbulent waters

VIEW FROM NEW YORK

It is proving to be a tough spring for Jeffrey Vinik, the once- invincible fund manager at Boston-based Fidelity Investments, the largest and best-known of America's mutual fund companies. Barely a day passes without his name appearing in the newspapers, rarely in flattering contexts.

His least favourite publication must be the Washington Post, which published a lengthy report earlier this month claiming that Mr Vinik and five former and current colleagues at Fidelity were under investigation by the Securities and Exchange Commission for alleged "front-running". That is the practice - illegal in the US - of managers buying equity for their personal accounts knowing that their funds will shortly also be doing so.

It looked briefly as though Mr Vinik's reputation had been ruined in as little time as it takes to hurl a copy of the Post down a garden path. Happily for him, however, doubt was cast on the report's veracity, when the SEC weighed in with a rare statement saying that it contained "inaccuracies".

More threatening for Mr Vinik, however, may be the pallid performance of the Magellan Fund that he manages. Still the largest fund in the US, with no less than $53bn in assets, it has returned just 2.83 per cent since the beginning of this year, trailing the rest of the industry significantly. In fact, Magellan is now ranked 613th out of the 628 US growth funds.

What has happened? Mr Vinik did not help himself by betting heavily in the first quarter on the bond market, which ended up faring poorly. But some analysts are murmuring that the public is beginning to take the reports of shady dealing to heart and is opting to steer its money elsewhere.

While companies left and right were reporting stellar first-quarter earnings, the news from Quaker Oats was gloomy thanks to a 91 per cent collapse in profits due to slowing food sales. And then there is the Snapple problem.

Snapple is a line of iced teas which was purchased by Quaker in November 1994 and which has been giving the venerable company grief ever since. Sales have been disappointing thanks to a vareity of distribution hiccups as well as increasingly fierce competition from other makers of "new-agey" summer drinks.

But surely no one on the Quaker board can have forecast the problems the Snapple bottle labels would generate. The design features a sailing ship meant to denote the Boston tea-party.

The trouble was, many in the African-American community saw not a tea clipper but a slave ship and promoted an embargo of the drink. It did not help that there was also a capital 'K' on the label. Some thought this short for KKK.

Quaker has been forced to doctor the design for this season. The K has been replaced with Kosher, to convey its original intended meaning. The words "Boston Tea Party" also appear on the bottles. All connotations of slavery and racism on the bottles have, the company sincerely hopes, now been erased.

National Westminster Bank may be in the process of pulling out of New York and New Jersey after selling out to Fleet Bank, but there is always time, it seems, for one more Big Apple experience. An old-fashioned bank heist, that is, but one with a happy final twist.

A robber struck at NatWest's Lower Broadway branch on Thursday, nabbing more than $1m that had just been delivered by a security service for the daily stocking of the bank's automated teller machines. Employees were held up at gun-point, their mouths sealed with duct tape - all the usual stuff. The thief had apparently not reckoned on one thing, however: the physical weight of all that money once he had crammed it into his booty bag.

The poor man had walked half a block from the bank when he could carry the money no longer and had to put it down. The bag - minus some $60,000 that the robber had time to stuff into his pockets and turnups - was recovered by police.

The crook - who got away - might remember to bring a get-away shopping trolley next time.