The oil sector has been out of favour with investors since the oil price began tumbling in the second half of 2014. Despite that, Alex Wright, manager of Fidelity Special Values (LSE: FSV), has been buying up small, unloved oil stocks, says Leonora Walters in Investors Chronicle.
The “contrarian investor” reckons some of his picks, such as Iraq-based Genel Energy, could be bought out by larger companies, while he expects Parkmead to lead the consolidation of smaller operators in the North Sea.
Wright has also bought shares in BG Group following the Royal Dutch Shell takeover offer, as a bargain way of building a stake in Shell. Wright has been running the 20-year-old investment trust since September 2012,having taken over from Sanjeev Shah (the fund was previously run by Fidelity’s former star manager Anthony Bolton, who left in 2007).
During his tenure, Wright has increased the fund’s exposure to smaller companies, says Kate Marshall of Hargreaves Lansdown. “His main area of expertise has previously been in this area of the market, in which he has built an excellent track record.”
This has increased the trust’s level of risk, but has also resulted in strong returns, after a period of weaker performance under Shah. The fund’s net asset value (NAV) is up by 116.6% over three years and 17.4% over one year, according to Trustnet – well ahead of the market.
Its share price has risen even more strongly over the same period, as its improving performance has caused the discount to NAV to narrow from 15% in September 2012 to around 2% at present. Ongoing expenses were 1.12% in 2014.
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| Fidelity Special Values top ten holdings | |
|---|---|
| Holding | % of assets |
| HSBC Holdings | 4.70% |
| DCC | 4.40% |
| Brewin Dolphin | 4.30% |
| Citigroup | 4.20% |
| Electronic Arts | 4.10% |
| Royal Dutch Shell | 3.40% |
| Lloyds Banking Group | 3.00% |
| Wolseley | 2.90% |
| CLS Holdings | 2.90% |
| ICAP | 2.80% |