Report: Fidelity buying more Cisco, so let's see if they're still agressively dumping old Lucent or just avoiding stepping in it again:
Dow Jones Newswires -- July 14, 1999
DJ Watchdog Says Fidelity Managers Are Returning To Techs
By Mara Der Hovanesian
NEW YORK (Dow Jones)--Fund managers at Fidelity Investments are ramping up their stake in technology stocks, according to a research firm that monitors the company's buying patterns.
David O'Leary, president of Alpha Equity Research Inc., predicts that Fidelity's monthly Mutual Fund Guide - scheduled for release in the next few business days - will show managers are putting money back into the tech sector.
A seasonal buying opportunity in the sector, the worst of year-2000 fears assuaged and Fidelity's huge influx of new cash - the largest inflow since early 1996 - have combined to account for the buying spree, O'Leary said.
The company's year-to-date inflows of $13.1 billion through May 31 are the firm's highest over this period since 1996's $18.8 billion, according to Financial Research Corp. in Boston.
"I think there's going to be an enormous appetite on the part of Fidelity managers to buy tech stocks," said O'Leary, of the Portsmouth, N.H., firm. "They'll buy from July to November - that's what they did last year, and why they had a fantastic fourth quarter."
Added O'Leary, "I think the goal for Magellan is to get back to 25%."
What Fidelity managers have done in June and in the second quarter won't be known for certain until the Boston fund company releases its report in the next week. But O'Leary suspects, based on May increases over April, the trend will continue through June and the rest of the summer.
Having made the most of the tech rally at the end of last year, Fidelity fund managers backed off on tech stocks, and built up energy, basic-industry and industrial-equipment weightings, while switching from growth stocks to more "value-oriented" holdings, starting in February.
In June, however, managers switched gears, O'Leary estimates. Other observers suspect large-cap growth stocks, including large technology companies, are back on Fidelity's buy list.
"I think they're still accumulating the large-cap growth stocks," said Donald Dion, publisher of Fidelity Independent Advisor, a Williamstown, Mass., newsletter. "The funds that have focused on large-cap growth really bounced back from that tech correction."
Fidelity Magellan's tech stake was as high as 25.8% of the portfolio in December, and dropped to about 18.8% as of May, O'Leary estimates. He expects manager Robert Stansky will beef up his tech position in July, if he hasn't already in June.
The Growth & Income fund has already ticked up its tech stake, O'Leary said. The fund's tech holdings grew to 15.4% last December, from 8.5% in the beginning of 1998. The manager trimmed back in February, but has reversed the trend to 14% in May from 13.6% in April, O'Leary calculates.
The Contrafund has swung from a peak of 24.8% in December, to a 15.3% low in tech stocks by April. That number edged up to 16.1% in May, O'Leary said, and he suspects the number will be higher yet for June.
O'Leary also tracks the buy and sell activity of Fidelity's $20 billion in the Select Series of funds, from which he estimates the behavior of large-fund managers. Select fund managers tend to be new to portfolio management and follow the lead of their more experienced counterparts, O'Leary said.
These funds are showing increases of electronic, medical-delivery, energy, technology and computer stock purchases, O'Leary said.
Some of the companies O'Leary suspects Fidelity managers are buying include America Online Inc. (AOL), Cisco Systems Inc. (CSCO), Broadcom Corp. (BRCM), Texas Instruments Inc. (TXN), Xilinx Inc. (XLNX), Hewlett-Packard Co. (HWP), RealNetworks Inc. (RNWK), JDS Uniphase Corp. (JDSU) and LSI Logic Corp. (LSI).
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