Feb. 7 (Bloomberg) — Harry Lange, manager of the
$45 billion Fidelity Magellan Fund, sold financial and technology
stocks in December and bought health-care and energy companies as
a slowing U.S. economy threatened corporate earnings.
Lange dumped a $453 million stake in office-electronics
maker Canon Inc. and a $192 million position in Wells Fargo %26amp;
Co., the fifth-largest U.S. bank, according to the most recent
monthly data from Boston-based Fidelity Investments. His biggest
new purchase was $407 million of shares of UnitedHealth Group
Inc., the largest U.S. health insurer.
“Hes looking to batten down some hatches, said Jim
Lowell, chief strategist at Adviser Investment Management Inc. in
Watertown, Massachusetts, whose clients buy Fidelity funds.
Magellan has fallen 12.5 percent this year, compared with
the 9.5 percent decline by the Standard %26amp; Poors 500 Index. The
fund, once Fidelitys largest, has been hurt by Internet-search
company Google Inc., which has declined 27 percent since the
start of 2008.
The 55-year-old Lange, who took over Magellan in October
2005, posted a return of 19 percent in 2007, beating 82 percent
of rivals that buy companies whose sales or earnings are growing
faster than average, according to data tracked by Bloomberg.
Fidelity re-opened Magellan to new investors in January, the
first time in more than a decade, to capitalize on Langes
success turning around the fund. It had trailed rivals in 2005
and 2006. He boosted returns by buying more international and
technology companies than predecessor Robert Stansky.
Fidelitys biggest fund, the $81 billion Contrafund managed
by William Danoff, has dropped 12.8 percent this year.
Lange declined to comment on his holdings.
Weakening Economy
Companies that profit from consumer necessities like health
care and energy are favorites of investors when they expect the
economy to weaken, said Russel Kinnel, an analyst at Morningstar
Inc. in Chicago. U.S. gross domestic product rose at an annual
rate of 0.6 percent in the fourth quarter, compared with 4.9
percent in the previous three months, as home construction fell
and Americans cut back spending.
Lange increased energy holdings to 11.6 percent of the
funds assets at the end of December from 9.9 percent a month
earlier. Energy companies have benefited from record oil prices.
Crude briefly topped $100 a barrel in January.
New energy purchases in December included $202 million in
shares of Hess Corp., a New York-based oil and gas exploration
company. Hess has dropped 19 percent this year after more than
doubling in 2007.
Health Care
Health-care shares have risen with expectations for
increased spending in the U.S. and Europe. UnitedHealth, based in
Minnetonka, Minnesota, rose 8.3 percent in 2007 and has fallen 15
percent this year. The industry represented 11.1 percent of the
fund in December, compared with 10.4 percent at the end of
November.
Financial holdings in December dropped 1.9 percentage points
to 10.1 percent of assets, and information-technology companies
declined by 1.5 percentage points to 28.2 percent.
Wells Fargo, based in San Francisco, reported better fourth-
quarter earnings than investors estimated because it limited
losses from the mortgage market. The shares are little changed
this year after falling 15 percent in 2007. Consumer finance and
mortgage companies were among the S%26amp;P 500s five worst-performing
industries in the fourth quarter.
Canon fell 19 percent in 2007 and another 11 percent in
2008. Apart from Tokyo-based Canon, Lange sold a $74 million
stake in Round Rock, Texas-based computer maker Dell Inc., which
is falling for the fourth straight year.
Developing Markets
Lange also increased investments outside developed markets.
He bought a $127 million stake in Suzlon Energy Ltd., a wind-
energy company based in Ahmedabad in Gujarat, India. The company
is down 21 percent this year after rising 48 percent in 2007.
Finlands Nokia Oyj, the worlds second-largest maker of
wireless networks, remained Langes biggest holding, followed by
glass producer Corning Inc. of Corning, New York. Espoo, Finland-
based Nokia has fallen 9.6 percent this year. Corning has dropped
4.7 percent after last years 28 percent gain.
Other December purchases included $189 million in Plymouth,
Minnesota-based fertilizer producer Mosaic Co., up more than
fourfold in 2007, and $104 million in National Oilwell Varco Inc.
of Houston, which more than doubled last year. Lange added
$175 million in New York-based wireless operator Verizon
Communications Inc. and $141 million in Cambridge, Massachusetts-
based biotechnology company Biogen Idec Inc., which rose 20
percent and 18 percent, respectively.
Stocks Lange sold also included $204 million of Tokyo real
estate company Mitsui Fudosan Co., which fell 16 percent in 2007,
and $166 million of San Antonia-based telecommunications company
AT%26amp;T Inc. It rose 16 percent.
To contact the reporters on this story:
Christopher Condon in Boston at
