IBD:"Fidelity added 3.2 million shares of BRCM to its existing holdings in 3Q"
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>>>Mutual Funds & Personal Finance
Monday, November 20, 2000
Fidelity Trimmed PC-Related
Stocks In 3Q
Big Fund Group Favored Wireless, Networking, Infrastructure Plays
By Paul Katzeff
Investor's Business Daily
Fidelity Investments in the third quarter leaned slightly away from personal computer-oriented tech stocks as it favored wireless, networking and infrastructure names.
"We're not seeing a wholesale selling of so-called old-line tech stocks," said Jim Lowell, editor of independent online newsletter Fidelity Investor.com. "But we are seeing a fairly consistent wholesale buying into the evolution from PC-related stocks to PCD-related stocks," he added, referring to personal communication devices.
One of the most decisive moves was in the networking sector. Ciena became the group's 25th largest holding as of Sept. 30. It moved up from 66th as of June 30. The company makes systems that increase the capacity of telecom networks.
By the end of the third quarter, Fidelity had accumulated 38.8 million shares. That was up from about 24 million shares on June 30, according to data compiled by Lowell.
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Another notable move was in the wireless sector. Fidelity built up Palm, the handheld device maker that licenses popular PDA operating software.
Palm rose to 63rd among Fidelity positions, as holdings jumped to more than 40 million shares from only 3 million. "Those are their significant moves," Lowell said. "And they concentrate around that overall sector of wireless."
In the same period, Fidelity was trimming Motorola and Nokia. "Fidelity seems to think PDAs like Palm will displace cellular phones as the device of choice among users for wireless communications," said Lowell. "That's radical."
Fidelity sold about 16 million shares of Motorola, bringing its total to 67 million as of Sept. 30. It sold about half its 101.7 million-share position in Nokia. The holding dropped to 73rd among the group's stocks.
Among networking and infrastructure names, Cisco Systems slipped from Fidelity's largest position to its No. 2 due to depreciation. The number of shares remained steady, Lowell says.
Fidelity actually beefed up shares in Sun Microsystems. Holdings rose to 71.8 million from the previous 66.9 million. The stock rose from about 91 at the end of June to about 129 by Sept. 1, only to fall to 116 3/4 by quarter's end.
Fidelity also added 3.2 million shares of Broadcom to its existing 4.3 million. During the quarter, the stock climbed 11%. "It's not that individual fund managers are making these moves in concert with each other," said Lowell. "And some funds sell while others buy. But it shows a general consensus on some themes, especially in technology."
Meanwhile, Intel declined to ninth from third position. "The stock depreciated," said Lowell. "They still had about the same number of shares, 207 million, at the end of the third quarter." Intel's stock fell 38% in the third quarter.
Microsoft fell two places to eighth as the stock tumbled 25%. Fidelity actually increased its stake to 146 million shares from 118.9 million on June 30.
Texas Instruments' share price fall of 31% moved the stock way down to 21st among Fidelity holdings from its previous eighth spot.
The group's juggling of tech names reflected some moves made by $101.6 billion Fidelity Magellan Fund.
"We saw a clear selling of Microsoft," said Lowell. "Fund manager Stansky reduced his position by about four-fifths to his current 27 million shares. While at the same time and for the first time, we saw Palm enter his portfolio in significant measure, as well as companies like Agilent Technologies (which sells network-test equipment)."
Lowell added, "At the same time, Stansky was selling his dot-com bombs: CMGI, DoubleClick and NBC Internet. Those were companies that were supposed to thrive and by midyear survive the sell-off based on ad-revenue models. Selling by Stansky and other growth managers shows that they're not buying that story. They're selling."
Lowell added, "There are no dramatic, bet-the-ranch buys and sells going on. In fact, they're still overweighted in tech vs. the S&P 500. Stansky is slightly underweight at 29.2% vs. 29.7%."
The risks within the tech space are being offset by bets in financials and pharmaceuticals, he says.
"You definitely see Fidelity managers as a whole looking for ways to 'barbell' risk within tech," he said. "They're offsetting volatility in tech stocks with major pharmaceuticals and financials. And "Among their tech-oriented funds, they're selling smaller, more volatile names and purchasing leadership names, which is a clear indication they prefer liquidity over profit potential," he said. That's slightly bearish, even though the funds are forced to be bullish on tech.<<< |
