Welcome, Fools, to part 24 of our several-thousand-part series, "Better Know a Stock Picker," which is loosely, but not too loosely, based on Stephen Colbert's "Better Know a District" from The Colbert Report.
Like Stephen and his thorough investigations into America's congressional districts, I take a look each week at a fund you may want to own. What's on tap this week?
|
Fidelity Magellan (FMAGX) | |
|---|---|
|
Expense ratio |
0.59% |
|
Fund size |
$45.4 billion in assets |
|
1-year return |
10.71% |
|
5-year return |
4.45% |
|
10-year return |
7.23% |
Top 5 holdings
Company | % of Assets |
|---|---|
Nokia Corp. (NYSE:NOK) | 3.55% |
Schlumberger (NYSE:SLB) | 3.24% |
Johnson & Johnson (NYSE:JNJ) | 2.85% |
UnitedHealth Group (NYSE:UNH) | 2.81% |
General Electric (NYSE:GE) | 2.74% |
Meet Harry Lange
The fightin' team at Fidelity Magellan is led by Harry Lange, who has been at the helm for just over a year but with "Fido" -- as Motley Fool Champion Funds advisor Shannon Zimmerman affectionately refers to Fidelity -- since the heyday of Peter Lynch.
It's been a tough road for Lange, who trails the market by roughly 7% so far. But don't expect that to faze him. Lange joined Fidelity on the day of the October 1987 stock market crash, after two brief stints at other investment firms and a 13-year career as an engineer in the Chevrolet division of General Motors (NYSE:GM).
So, he's seen worse days. And better days, too. Lange previously served as the longtime manager of Fidelity Capital Appreciation, which beat the market by more than 6% annually over the five years ended in early 2004. So impressed with Lange's record was Shannon that he immediately added Capital Appreciation to the Champion Funds portfolio, and then picked it again a year later. Both selections have outperformed the benchmark since. That's 'zazz, baby.
How he invests
Surely the value-huggers will claim that Lange's go-go-growth style is finally catching up to him. He couldn't disagree more. Upon assuming command of Magellan, Lange jettisoned popular S&P 500 members Pfizer and Exxon Mobil (NYSE:XOM) in favor of fast movers such as Google.
And he'll continue to. Lange recently told Reuters that while he feels bad about Magellan's short-term performance, growth stocks are still cheap. Accordingly, he's been adding to technology and biotech holdings such as Genentech (NYSE:DNA).
That takes guts and a willingness to zig while others zag. Lange has all that and more, which he's used to stick it to Wall Street's stockinistas. As he told Reuters, "When people get really pessimistic about the outlook for growth stocks and tech stocks and the economy, it often offers a great opportunity, and I normally step up more in times like this." Eat that, Wall Street.
Is this fund for you?
So can Lange deliver like former Magellan captain Peter Lynch? That won't be easy. Lynch built a record of 29% average annual returns over 13 years as manager. And he had a smaller fund to work with. Magellan's size -- $45 billion in assets as of October -- means there's a lot of moola to put to work.
Still, Shannon's confidence in Lange isn't misplaced. Good managers are good managers, and Lange's role at Magellan offers him even more freedom than he had at Capital Appreciation. That, plus a miniscule 0.59% expense ratio, makes this latest incarnation of the Magellan fund enticing. If only you or I could buy shares. Sadly, Magellan has been closed to new investors since 1997.
But don't let that discourage you. Growth gurus such as Tom Marsico continue to do well, and there are plenty of top-notch choices available in the category. One, which joined the portfolio in the November 2004 issue, charges only 0.39% in annual expenses and is up on its index by more than 7%. (It's also one of several winners for Shannon; click here to get 30 days of free access to the entire portfolio.)
And that's this week's profile. See you back here next week, fund nation. Good night.
Think you can't beat the market with funds? Think again! The selections in Shannon Zimmerman's Motley Fool Champion Funds portfolio are up an average of 24% vs. just 16% for their comparable benchmarks. Ask us for an all-access pass to get an unfettered look at all of Shannon's picks, manager interviews, and model portfolios. Go ahead; it's free for 30 days and there's no obligation to buy.
Fool contributorTim Beyers, ranked 2,520 out of 12,488 inMotley Fool CAPS, is a regular viewer of The Colbert Report. (Stay the course.) Tim owns shares of Nokia. Get the skinny on all of the stocks in Tim's portfolio by checking his Foolprofile. Johnson & Johnson is a Motley Fool Income Investor selection. UnitedHealth is a Motley Fool Stock Advisor and Inside Value recommendation. Pfizer is an Inside Value pick. The Motley Fool's disclosure policy is always championship caliber.
