Mr Vinik has denied all the allegations

Mr Vinik has denied all the allegations.Despite these well-publicised difficulties, his announcement caught most off guard. “It was entirely his decision,” a Fidelity spokesman said of his departure “There was no pressure from the company to resign”.. “The fear is that the next manager may not be so loyal to the fixed income markets,” commented Matthew Greenwald of Oppenheimer Capital.Mr Vinik’s regulatory headaches began with reports last year that he was being probed for upbeat remarks he made about Micron Technologies in a media interview at a time when Magellan was in the midst of selling Micron.More recently there have been unconfirmed reports that he and other senior Fidelity managers may have been “front-running”, namely buying shares on their personal accounts in firms that were about to attract Fidelity investments. The Boston-based company denied that Mr Vinik had been forced out, however.Mr Vinik is widely regarded to have stumbled badly late last year by betting heavily on bonds, which have subsequently fared relatively poorly.

Bonds account for about $10bn of Magellan’s holdings, analysts said yesterday. So far this year, the fund has gained only 4.7 per cent, well below nearly all the market indexes which have produced double-digit returns.Yesterday’s market nervousness reflected concern that Robert Stansky, who was named to replace Mr Vinik, would move swiftly to change tack away from bonds. Recently, however, he has drawn criticism as his fund has seriously underperformed the competition.Reports last winter that he has been the target of two separate investigations by the Securities and Exchange Commission also attracted unwanted publicity for Fidelity. His announcement put a chill on the bond market, with 30-year Treasury Bonds dropping 19/32 of a point. The Dow Jones Industrial Average also slipped back on the news, interrupting a run of record-setting gains.
Mr Vinik, 37, took the helm at Fidelity’s $56bn Magellan Fund in July 1992 and quickly established himself as a virtual guru of the markets, whose investment choices were widely mimicked. Jeffrey Vinik, the once-untouchable but recently beleaguered manager of America’s largest and best-known mutual fund, the Magellan Fund, astonished Wall Street yesterday by resigning and unveiling plans to set up his own investment firm. Cost savings would come from merging the two businesses, although Martin Ballinger, Go-Ahead’s managing director, suggested that further cost cutting from staff and other rationalisation was now limited after the efforts of the existing management at London General.He added: “In the long term, we think its bloody brilliant getting nearly 20 per cent of Europe’s biggest bus market and particularly south of the Thames, which is poorly served by the Underground.”London General operates one of the largest route networks in the capital, covering south-west and central London and Surrey.Investment, page 24.

London General has raised operating profits including exceptional items from pounds 2.22m in 1994 to pounds 8.43m in the year to March, on turnover which has grown from pounds 50.5m to just pounds 52.8m.The company said it believed it could sustain margins in the short to medium term and to increase them in the longer term as consolidation of the market continues. The drivers and other staffbacked the management in its successful pounds 31.5m bid for the group in November 1994. They ended up with 15 per cent of the company, the same proportion as the four-man board led by managing director Keith Ludeman. The deal means that North-east based groups now control over a third of the capital’s buses.
The acquisition of London General gives the Newcastle-based Go-Ahead, which already owns London Central, another 10 per cent of the capital’s market, taking its share to around 18 per cent.That is roughly the same as Cowie, the Sunderland-based motor dealer which owns the Leeside and South London bus companies.Go-Ahead is raising pounds 19.5m in a placing and open offer to finance the deal and is calling on shareholders to approve a change in the articles to allow it to take on an enlarged borrowing facility of pounds 32.7m. Three hundred staff at London General, one of the capital’s biggest bus companies, each had a pounds 2,600 windfall yesterday after the company was sold to the Go-Ahead bus group for pounds 46.1m. The immediate challenge is that income of pounds 196m will soon be reduced by pounds 67m when Talisman, the settlement system currently run by the Exchange, is replaced by the automated Crest, independently owned by 60 financial bodies.While much of the first round of savings will come from job losses and the end of the heavy investment spend required by Sequence, the longer term reductions in the strategic review will involved cost reductions across the board. “We are talking about a much better management of resources, getting the cost base right down while delivering a quality service to the market,” said a source.Separately yesterday, Kenneth Clarke, the Chancellor, agreed in principle that market makers should continue to enjoy the privilege of exemption from stamp duty when the new system for dealing in equities is introduced to London next year..

The Exchange has come in for heavy criticism from some of its powerful member firms and the Treasury for carrying a cost base no longer suited to its shrunken significance in the City.Presenting yesterday the financial results for the year to 31 March 1996, executives stressed the continued progress in achieving significant savings, at the same time as the exchange is about to complete the modernisation of its Sequence information and trading platform.”Through our concerted efforts to control costs, coupled with sustained investment, we have laid solid foundations for a financially viable Exchange in the years ahead,” the chairman John Kemp-Welch said.The Exchange last year reduced underlying operating costs by nearly 9 per cent to pounds 161m. To be considered by the board in July, it foresees the need to make efficiency savings well beyond the first stage in cost reductions required by preparing for Crest.Sources spoke of the Exchange aiming ultimately for savings of around pounds 50m from its position today, or a reduction of about a third. The current workforce is about 940, down from a peak of 2,800 in the wake of the 1986 Big Bang deregulation.The full scope of the savings are contained in a strategic review, looking forward to the role of the Exchange at the end of the century. Top line growth is in decline and if the trend continues, helped by a clobbering from the regulator Don Cruickshank, it could stop altogether.Continental Europe may possess promise but all C&W has thus far got to show for its expensive foray into Germany is a pounds 20m loss. If anyone was bold enough to bid it would be like “buying a block of ice that melts as you get your hands on it,” says Mr Smith. But unless C&W decides to break itself into bits it is shareholders who will feel the chill..