Founded in Boston in 1946, Fidelity Investments has grown to become one of the largest and most recognized multinational mutual fund, brokerage and financial services companies in the world. It's also home to some of the most successful and well-known portfolio managers in the mutual fund business, including famed investor Peter Lynch, who managed Fidelity's flagship Magellan Fund from 1977 to 1990, turning in an average annual return of 29% and attracting enough investors to grow the fund's assets from $20 million to almost $15 billion.
1. Joel Tillinghast
Joel Tillinghast started with Fidelity in 1986, following a telephone conversation with Peter Lynch. After the conversation, Lynch hung up and said, "We have to hire that guy." Lynch personally mentored Tillinghast. By 1989, Tillinghast was a portfolio manager himself, taking the management reins of the value-oriented Fidelity Low-Priced Stock Fund. The fund has regularly outperformed the S&P 500 Index over the past 25 years and only experienced two down years. Since 2012, Tillinghast has also managed the Fidelity Series Intrinsic Opportunities Fund, increasing its net asset value (NAV) from $10 to $14 a share in just three years.
Tillinghast holds firmly to a holistic value investing strategy that rigorously examines a company's fundamental financials and management, and takes into account macroeconomic and industry trends. The Fidelity Low-Priced Stock Fund is noteworthy for simultaneously having the largest number of holdings (about 900), yet one of the lowest portfolio turnover ratios of any actively managed fund Fidelity offers.
2. Will Danoff
Will Danoff joined Fidelity after completing his MBA at the Wharton School of Business in 1986. Danoff is another pupil of Lynch. Whereas Tillinghast is more of a confirmed value investor, Danoff tends to be focused more on growth investing. He seeks to identify large-cap companies that he believes will double earnings within three to five years, expecting the companies' stock prices to follow suit.
In 1990, Danoff took over management of what has become Fidelity's most widely traded fund, the Fidelity Contrafund, which currently has over $100 billion in total assets under management (AUM). Since Danoff assumed control of the fund, it has shown investors average annualized returns of 13.4% for 25 years. The S&P 500's average return over that time span is only 10%. The Contrafund is Fidelity's single largest mutual fund in terms of total portfolio assets. Along the way, Danoff built his reputation further by making notable early investments in Facebook and Alibaba.
Danoff has recently brought his own pupil, John Roth, aboard as co-manager of the other major Fidelity fund he handles, the Fidelity Advisor New Insights Fund. Some at Fidelity see Roth as Danoff's hand-picked successor. The issue of who will replace the manager of Fidelity's star Contrafund is definitely an important concern for Fidelity management.
3. Tom Soviero
Tom Soviero is the primary manager of the Fidelity Leveraged Company Stock Fund. This fund has generated a 10-year average return of 6.6% through Soviero's ability to identify companies that can advantageously use high debt levels to generate profits.
Soviero took over the fund's management in 2003, and since then, the fund has beaten the S&P 500 and the Credit Suisse Leveraged Equity Index. He tends to look at investments over the long term and often sticks with an investment even if it goes down in the near term as long as he's convinced of its fundamental value. He has also managed, since 2005, the Fidelity Convertible Securities Fund, and his portfolio turnover ratio there is only one-third of the category average. The fund's 10-year average annualized return is 6.12%, about 1% better than the category average.
Soviero's investment strategy focuses on identifying undervalued stocks of companies with strong cash flow relative to total enterprise value. He especially looks for situations where a specific catalyst, such as a new product, acquisition or management change, may propel a stock upward.
4) Sonu Kalra
After getting his MBA degree from the Wharton School of Business, Sonu Kalra joined Fidelity in 1998, initially as a stock analyst for the media and entertainment sector. After working as an analyst in a number of specialty technology subsectors, Kalra was appointed the sector leader for Fidelity's technology analysis team in 2002 and began managing the Fidelity Select Technology Portfolio and the Fidelity VIP Technology Portfolio funds.
In 2009, Kalra took over as primary manager of the Fidelity Blue Chip Growth Fund, which focuses on large-cap blue-chip growth stocks. This fund has been a top-performing fund for Fidelity since Kalra took the reins, with a five-year average annualized return of 13.96% that puts it in the top 10% of funds in the category.
Like Soviero, Kalra looks for special situations or catalysts that may significantly increase a stock's value. He also seeks stocks that he believes have solid growth prospects well above consensus market estimates. Like almost all of Fidelity's standout stock pickers, he takes a value investing approach aimed at identifying fundamentally undervalued firms.
5. John Roth
John Roth has been largely under the tutelage of Will Danoff since coming to Fidelity in 1999. He has managed some of the Fidelity Select funds and was appointed the manager of the Fidelity New Millennium Fund in 2006 and the Fidelity Mid-Cap Stock Fund in 2011. Roth's active management of the New Millennium Fund has outperformed the S&P 500 Index consistently throughout his nine years at the helm. In 2013, Roth was made co-manager, along with Danoff, of the Fidelity Advisor New Insights Fund, a large-cap growth fund.
Roth is known within Fidelity's offices for his 2004 call to buy Google's initial public offering (IPO) at $100 a share, or about $600 a share less than Google stock sells for these days.
Roth takes a combination approach of both value investing and growth investing analysis, and he has brought a shift toward slightly smaller cap stocks to the New Insights Fund. He and Danoff search for stocks where they identify opportunities represented by a different, more positive view of a company than that of most analysts. Since Roth was added to the management team, the New Insights Fund has a three-year average annualized return of 13.45%, better than its five-year average of 10.86%.