FIDELITY SPECIAL VALUES

Investment Process

Although manager Alex Wright does account for economic factors, the main investment process revolves around active stockpicking. Wright looks for companies which have exceptionally cheap valuations, or an asset such as inventory or intellectual property that should stop their share price falling below a certain level. He also looks for events that could significantly improve a company’s earning power but are not currently reflected in its share price. This could be a change in the company’s rivals or market, a new product line or expansion into a different business area. Wright looks at a company’s earnings and financial risks and does detailed research on their balance sheets. He also seeks stocks with new management teams who have a track-record of improving companies. In addition, companies are sought which can exploit regulatory change or disruption. The portfolio holds between 80 and 120 names, of which only about a third are FTSE 100 stocks. Wright allocates capital according to a company’s stage of recovery with position sizes not typically exceeding 10%.