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John Tillinghast, manager of the Fidelity Low-Priced Stock Fund, (MUTF: FLPSX ) ” owns one of today’s best investment records ,” according to a profile proceeding a recent interview published in Barron’s. In the 26 years he has managed the fund, it returned an average of 13.7% annually (more than 4% higher than the S&P 500). Tillinghast is restricted by the fund’s charter to buying stocks priced at under $35 per share. He explains: “the original idea was that low-priced stocks weren’t well-followed by Wall Street” and “$35 is just above the average price of stocks listed on the New York Stock Exchange.” Tillinghast “look[s] for a highly visible discount to fair value… and management that is fair and honest” and holds “large stock ownership” in the company. He observed that the fund holds about 9% cash at present, down from 11% last year, because “in the past year or two, I have gone from being a little standoffish about small stocks to thinking that there are a decent number of opportunities, but they are still not abundant.” Speaking about political developments that may affect the foreign stocks making up about 35% of the fund, such as Japan’s recession, Tillinghast commented: “My approach to cycles is to pay less attention to the statistics, but to have a general notion of where we are in the cycle, and what that means for valuations,” noting that “In Japan, there are still a lot of cheap companies with great balance sheets.” Regarding energy stocks, Tillinghast has “an index-like weighting” because of uncertainty in the sector, which he describes as “brutally tough for a value investor.” Comparing conditions that favor value versus growth approaches, he said: for a sustained outperformance of value, you need more dispersion in valuations,” but “when everything is priced the same, it’s lousy for value investors and for active management in general.”Scalper1 News
Scalper1 News