A True Go-Anywhere Fund Harry Lange is more flexible than most of his colleagues at Fidelity. And that's paid off with market-beating returns
By Amy Feldman

(MONEY Magazine) – Fidelity has gotten pretty boring these days. Many of its biggest funds hew closely to their benchmark indexes. Their managers seem to have little leeway to take big risks or make against-the-grain bets.

Harry Lange is a notable exception. The 52-year-old manager of Fidelity Capital Appreciation fund is a true go-anywhere stock picker. He buys both small-cap stocks and blue chips, and invests pretty much anywhere in the world. His results are impressive: Capital Appreciation has returned 10.5% annualized during Lange's eight-year tenure through April 20, according to Morningstar, vs. 8.6% for the S&P 500. Last year the fund gained an impressive 52%. Jim Lowell, editor of the Fidelity Investor newsletter, says Lange's opportunistic style reminds him of somebody. "He's more like Peter Lynch," says Lowell.

Just look at Lange's gutsy bets on technology. In 2001 and 2002, when tech was loathed, Lange plowed in--at one point putting 47% of assets into the sector. But after the stocks rebounded, he took profits and cut tech back to 21%. "I do not think the economy is turning around so quickly that we will have another big tech run," Lange says. So what's he been buying?

CELL PHONES Here is one technology play Lange still believes in. His biggest cell-phone bet as of March 31 was Motorola (MOT)--in fact, it was Capital Appreciation's top holding. "People were saying there are too many cell phones, but I don't think that's the case," he says. His reasoning: In Asia, people replace their cell phones rapidly to upgrade for video, messaging and other new functions. Lange thinks that behavior will steadily spread to the United States.

PHARMA This is the first time that Lange has bet on the big drugmakers. Again, it's a contrarian play, since these stocks have fallen dramatically. "There are worries about patents and reimportation, but those worries are priced in," he says. "They are ridiculously cheap." Lange has preferred the market leaders, such as Pfizer (PFE), over the turnaround plays that many value investors like these days. Pfizer trades at a below-market 18 times this year's estimated earnings.

METALS Lange attributes his optimism on metals to his bullishness on China's growth. He figures that the process of building China's infrastructure could create shortages of key metals such as aluminum and copper. That would be a boost for top 10 holding Phelps Dodge (PD), which Lange bought after a trip to Asia in September.

JAPAN Lange used to be Fidelity's research chief in Japan and continues to travel there a few times a year. That's given him the conviction to bet 11% of assets on Japanese shares, with a focus on banks. He calls the purchase of banks "a call on the economy and the market." He adds, "I didn't think before that the whole country was ready to turn, and now I think that it is." --AMY FELDMAN