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Fidelity lightens up on techs
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April 26, 1999: 5:51 p.m. ET
Magellan and some other funds have trimmed technology in recent months
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NEW YORK (CNNfn) - Some big names at fund giant Fidelity Investments have trimmed their technology holdings in recent months in favor of cheaper financial stocks and utilities.
Newly released data shows that Fidelity's mammoth Magellan, Contrafund and Growth & Income funds all shaved their technology holdings between Dec. 31, 1998, and March 31.
The closely followed Magellan fund, with $90.7 billion in assets, dropped its technology stake to 20.9 percent at the end of the first quarter from 25.8 percent in December .
The Contrafund, with $41.2 billion in assets, shaved technology to 18.9 percent from 24.8 percent in the same time. The Growth & Income fund, with $49.2 billion in assets, cut the sector to 15.1 percent from 15.4 percent.
"They've made so much money in technology, they're taking some money off the table," said Donald Dion, editor of the newsletter Fidelity Independent Advisor.
A spokeswoman for Fidelity said that managers makes their own decisions on what stocks they buy and sell. The managers weren't available for comment.
Some fund analysts said they don't think Fidelity managers are losing faith in technology and that it's only natural the funds would take some profits after such huge run-ups in 1998.
"They're selling a little, but their technology weightings are still way ahead of where they were six or nine months ago," said Russ Kinnel, head of equity research at fund researcher Morningstar.
Kinnel said it was a lot more dramatic last year when funds like Magellan and Contrafund started getting into technology.
"In the second half of last year you saw a lot of Fidelity ramp up their technology investments," he said. "This tells me they're not just zealots out there who just want to buy technology. They're still paying attention to valuation."
Managers like Magellan's Robert Stansky have capitalized on the basic premise of buying when other people are selling -- and selling in rallies, Kinnel said.
Magellan increased its finance holdings to 12.8 percent on March 31 from 11.3 percent on Dec. 31, 1998.
Contrafund increased its media/leisure holdings to 16.9 percent from 13.6 percent in the same time, and boosted utility holdings to 15.3 percent from 14 percent. The Growth & Income fund increased its finance holdings to 16.5 percent from 14.5 percent.
Other Fidelity funds have trimmed technology more recently, Dion said. For example, the high-flying Fidelity 50 Fund, with $419 million in assets, reduced technology to 45.6 percent on March 31 from 48.4 percent on Jan. 31, he said. The New Millennium Fund, with $2.1 billion in assets, lowered technology to 38.4 percent from 40.2 percent in the same period.
There are exceptions, however. The Aggressive Growth Fund, with $4.1 billion in assets, boosted technology to 36.2 percent on March 31 from 30.3 percent on Dec. 31, 1998.
"Fidelity has 300 funds with different managers," Dion said. "As a company, they've lightened up on technology as technology has gone up, but there are a few exceptions."
And for many of the funds, such as Magellan, technology is still the biggest play, Dion said.
"We still feel good that Fidelity continues to be overweighted in an area that's been performing so well," Dion said. "We're comfortable with the steps Fidelity is taking to protect these gains."
-- by staff writer Martine Costello
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