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Updated from 10:27 a.m. EDT:

After a stellar four years, high-profile money manager Jeff Vinik is getting out of the hedge-fund business.

Vinik Asset Management

, the Boston hedge fund shop run by the former


(FMAGX) - Get Fidelity Magellan Report

Magellan fund manager, will shut down and return some $4.2 billion to investors on Dec. 31, according to a Thursday company announcement.

Hedge funds are largely unregulated portfolios with million-dollar minimums, primarily for wealthy individuals and institutions. Since starting in November 1996, Vinik's fund has beaten the

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S&P 500

each year after fees. This year the fund was up 45.67% through Sept. 20 after fees, according to the firm, compared with a 4.2% loss for the S&P 500. Vinik said the fund was only "modestly invested," though the portfolio typically included some 350 stocks.

In a prepared statement, Vinik said the closing wasn't driven by a bearish stance on the market. Rather, he and the firm's two other principals, Mike Gordon and Mark Hostetter, will manage a smaller pool of their own money, allowing them to "focus more time and energy on their personal lives."

Vinik made his name running Magellan from 1992 to 1996. It was the largest fund in the nation at the time. He left shortly after making a significant and unsuccessful bet on bonds in the stock fund's portfolio.

Know When to Hold 'Em

At the end of the second quarter there were 181 stocks in the fund's portfolio, according to

, a Web site that tracks institutional stock ownership. Only $1.4 billion -- about one-third of the fund's assets -- were invested in stocks on June 30.

It's doubtful that Vinik still has many position he hasn't liquidated. Announcing plans to cash out of the market while still holding large positions wouldn't fit his savvy style. A look at the fund's top-15 holdings at the end of June illustrates a Midas touch. In a difficult year, only two of those top-15 picks are under water and seven have more than doubled.