Barron's view of Sullivan and Fidelity.
An excerpt. interactive.wsj.com
2/21/2000 - By Sandra Ward
The latest to give up the mundane world of mutual funds for the seemingly high-rolling ways of hedge-fund life is 29-year-old Erin Sullivan, manager of the Fidelity Aggressive Growth fund for the past two and a half years. Under her tenure, the fund grew to $17 billion from $2 billion. After turning in a stellar performance in 1999 -- her 103% gain was the second-best among Fidelity's diversified stock funds -- she decided to part ways with the Boston behemoth to try her hand in hedge funds. Sullivan's move follows hot on the heels of Andrew Kaplan, manager of the Fidelity Select Technology and Select Developing Communications funds, who left 10 days ago. Not since Jeff Vinik left his post at Magellan in June 1996 has such a high-profile manager decided to go it alone. Details of Sullivan's plans remain unclear. She has hired a publicist to represent her, but has provided the publicist with no information. Unlike Vinik, however, Sullivan remains something of an unproven commodity.
Says Jim Lowell, editor of the Fidelity Investor newsletter, "One of the questions Erin has to answer is how well she will do without the deep analytical pockets brought to her table by Fidelity. I question the depth of her ability to deliver."
He notes, too, that her departure may point out a bigger problem for Fidelity: How deep is the loyalty of its managers at this point? "The disconcerting and troubling thing is that at age 29, with less than five years of money management, being treated as the stockpicking goddess wasn't good enough to pull the loyalty strings," Lowell points out. "Fidelity can't afford to lose their top managers after only two years of performance." He's worried, too, about the ability of Robert Bertelson, named to succeed Sullivan, to keep up the pace, and is concerned that Fidelity will start rewarding loyalty over performance. He recommends selling Aggressive Growth as a result of the manager change, but cautions that Fidelity doubled the redemption fee about a month ago on that fund.
Sullivan may be the latest but she sure won't be the last to turn her back on mutual funds. Some visible departures recently include David Marcus leaving Franklin Mutual Series to start his own fund; Emmy Sobieski jumping to Palantir Capital from Nicholas-Applegate; Nancy Kukacka and Angeline Ee saying goodbye to Montgomery Asset Management to start their own hedge fund; and Philip Treick exiting the Transamerica funds to launch a hedge fund. Even Brian Stansky, the brother of Fidelity Magellan skipper Robert Stansky, has left T. Rowe Price to form a hedge fund in Boston focused on media and telecom plays.
Comment: The question is how much of the 17 billion will follow her. Her hedge fund performance will be monitored to her old fund's performance.
Jack |
