Welcome, Fools, to part 51 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, each week I take a look at a fund you may want to own. What's on tap this week?
|
Fidelity Value (FDVLX) | |
|---|---|
|
Expense ratio |
0.67% |
|
Fund size |
$22.9 billion |
|
One-year return |
23.80% |
|
Five-year return |
16.12% |
|
10-year return |
11.55% |
Top 5 Stock Holdings
|
Company |
% of Assets |
|---|---|
|
Baxter International (NYSE:BAX) |
1.46% |
|
Xerox (NYSE:XRX) |
1.27% |
|
Owens-Illinois (NYSE:OI) |
1.20% |
|
Tyco International (NYSE:TYC) |
1.10% |
|
Avon Products (NYSE:AVP) |
1.06% |
Meet Rich Fentin
The fightin' team at Fidelity Value has been led by manager Rich Fentin since 1996. He's done well in that time, outpacing the S&P 500 by more than 4% per year. Eat that, Wall Street.
Or don't. Fentin's superstantial strategy hasn't been enough to beat the benchmark Russell Midcap Value index. That may be why Forbes says that Fentin isn't "the best stock picker at Fidelity" but that he has a "long and consistently credible" track record.
Consistency is the key word there. Since 2000, Fidelity Value has recorded just one losing year, in 2002, when the bear market clawed at everything in sight. Fentin, for his part, stuck it to both his category peers and the broader market that year.
How he invests
When it comes to picking stocks, Fentin strikes me as a meat-and-potatoes sort of guy. Here's how he described his investing process in a recent press release: "... I take an absolute-value approach, looking for undervalued companies that are trading in the lower end of their historic range (within 20 to 30 percent of their historical low) and that are going through some sort of positive catalyst to spark an earnings-growth improvement...."
Smart thinking, I'd say, and somewhat reminiscent of his onetime boss, Peter Lynch. (Fentin joined Fido in 1979 and became a research assistant for Fidelity Magellan (FMAGX) under Lynch.) For example, Lynch bought Fannie Mae (NYSE:FNM) when no one else would, because of the strength of the underlying business. $500 million later, he was proven right.
Can Fentin claim similar successes? Maybe not a half-billion dollars worth, but packaging specialist Owens-Illinois has nearly doubled since January, contributing heavily to Fidelity Value's 4.5-point lead over the S&P 500 thus far during 2007.
Is this fund for you?
Value investing is a funny game. On the one hand, there's something very appealing about buying businesses for less than they're worth. On the other, it can take years for investors to pay up. By combining a penchant for cheap quality with a desire for positive catalysts, Fentin rigs the investing game in his, and his investors', favor.
And he's doing it on the cheap. Fidelity Value charges a minuscule 0.67% expense ratio -- less than half the 1.38% you'd have to pay for most of Fentin's category peers.
If there's a problem with this fund, it's that Fentin recently decided to take a three-month leave of absence. No reasons were given, but he's expected back in the fall. In the meantime, co-manager Matt Friedman, who has been pummeling the market as leader of Fidelity Value Strategies (FSLSX), will care for Fentin's portfolio.
Still not convinced? Not to worry. Dozens of excellent value funds are still available, many of which you'll find in Shannon Zimmerman's Motley Fool Champion Funds service. A no-strings-attached, 30-day free peek at his portfolio of winners, which are up an average of 15% on their respective benchmarks, is yours for the asking. Here's how to get started.
And till next time, fund nation, good night.
For more Foolish coverage of the value vanguard:
- Brian Barish likes to invest opportunistically.
- Chuck Royce prefers his bargains small.
- For cheapskates Mason Hawkins, Staley Cates, and Andrew McDermott, investing by the book is a recipe for tasty returns.
Tyco and Fannie Mae are Motley Fool Inside Value selections.
Fool contributor Tim Beyers is a regular viewer of The Colbert Report. (Stay the course.) Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Find Tim's portfolio here and his latest blog commentary here. The Motley Fool's disclosure policy is championship-caliber.
