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Summary FLPSX has been a steady long-term performer easily beating its benchmarks. FLPSX is a low beta fund with a high Sharpe ratio. You get a 900+ stock globally diversified portfolio with a reasonable expense ratio. Overall Objective and Strategy The primary objective of Fidelity Low-Priced Stock Fund (MUTF: FLPSX ) is to seek capital appreciation by investing 80% of its assets in low-priced stocks (at or below $35), which often leads to investments in small- and mid-cap securities. It invests in both growth and value stocks. The fund looks for high-quality, growing companies that trade at bargain prices – e.g. companies with strong balance sheets and good free cash flow yield. Joel Tillinghast, who has managed the fund for over 25 years, has been quoted as saying “I’m only interested in stocks selling for 12 or 14 times earnings or less.” Fund Expenses The expense ratio for FLPSX is 0.82%, which is reasonable for a well-managed, global equity fund. The fund discourages active trading and is designed for long-term investing. It is a no-load fund, but it assesses a 1.50% redemption fee if the fund is held for less than 90 days. Minimum Investment FLPSX has a minimum initial investment of $2,500. Past Performance The fund is classified by Morningstar in the “Mid-Cap Value” or MV category. Compared with other mutual funds in this category, FLPSX has performed quite well. Here are the long-term performance figures computed by Morningstar: FLPSX Category (MV) Category Rank 15 Year 12.32% 8.76% 2% 10 Year 9.03% 7.32% 11% 5 Year 15.69% 14.08% 21% 3 Year 19.02% 18.11% 36% 1 Year 5.64% 1.16% 12% YTD 3.52% -0.34% 6% Source: Morningstar Mutual Fund Ratings Lipper Ranking : Funds are ranked based on total return within a universe of funds with similar investment objectives. The Lipper peer group is Small Cap. 1 Yr #520 out of 1,438 funds 5 Yr #431 out of 1,100 funds 10 Yr #174 out of 786 funds Morningstar Rating : Category is Mid-Cap value Overall 4 stars out of 429 funds 3 Yr 4 stars out of 429 funds 5 Yr 4 stars out of 370 funds 10 yr 4 stars out of 242 funds Fund Management Joel Tillinghast has been the primary fund manager since 1989. Over his 25+ years running the fund, it has beaten the Russell 2000 by a wide margin. After graduating from Wesleyan, he briefly worked for Value Line before being hired by Fidelity. FLPSX owns over 900 stocks and people at Fidelity have said that Tillinghast knows the details on every one of them. There is a large support team of six additional analysts who were hired to assist Tillinghast in 2011 when he took a brief leave of absence. Over time, the other analysts are taking over larger portions of the portfolio management. Top Ten Holdings (as of June 30, 2015) UnitedHealth Group (NYSE: UNH ) Next PLC Seagate Technology (NASDAQ: STX ) Best Buy (NYSE: BBY ) Microsoft (NASDAQ: MSFT ) Ross Stores (NASDAQ: ROST ) Metro, Inc. ( OTCPK:MTRAF ) Barratt Developments PLC ( OTC:BTDPY ) Unum Group (NYSE: UNM ) Aetna (NYSE: AET ) Asset allocation (as of June 30, 2015) Domestic Equities 54.75% International Equities 36.25% ——-Developed Markets 29.01% ——-Emerging Markets 7.24% Bonds 0.01% Cash 8.99% Fund Characteristics versus the Benchmark Index Valuation Portfolio Index Price/Earnings (1-Year Forecast) 14.1x 20.0x Price/Book 2.0x 2.3x Price/Cash Flow 10.4x 15.1x Return on Equity (5-Year Trailing) 16.2% 9.3% Comments Fidelity Low-Priced Stock Fund was first launched in December 1989 as a small-cap fund, and originally it required most new holdings to sell for $15 or less. It had a great record the first few years out of the box, and it attracted a lot of assets. Eventually, as assets under management grew, the price cap was lifted to $35, and the fund now owns more mid-cap and large-cap holdings. FLPSX is definitely not a benchmark hugger and owns many foreign stocks that are very small and have little analyst coverage. Some of the small foreign holdings do not even publish information in English. It also has large positions in Microsoft and UnitedHealth Group which are definitely not mid-cap stocks. One of the best features of FLPSX is its low volatility. Fidelity reported a recent beta of only 0.58 as of June 30. Because of the low beta and good performance, the fund has a high Sharpe ratio of 2.01, which measures return per unit of risk. I first purchased FLPSX back in 1990, and have been very pleased with its long-term performance. I only wish my initial purchase had been much larger. Because it is such a steady performer, it is the kind of fund you can buy and put away for the long term. Fund turnover is generally pretty low, so it can be a good holding for a taxable account or an IRA. I always find it interesting to read Joel Tillinghast’s quarterly performance reviews where he discusses which fund holdings added or subtracted from the fund’s performance. He also discusses how various sectors have done around the world. Disclosure: I am/we are long FLPSX. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Scalper1 News
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