Monday, June 29, 2009

Harry Lange - Our Best Contrary Indicator?

Last May, Fidelity Magellan fund manager piled into banking stocks. He got killed.

Read prior posts Skim Biz Update - Fidelity Investments and the follow-up Marginalizing Analysts.

Now behold the nugget I just unearthed today:

Fidelity's Magellan Fund Boosts Stakes In BofA, Other Banks

BOSTON (Dow Jones)--Fidelity Investments' Magellan mutual fund appeared to significantly boost its stake in Bank of America Corp. (BAC) in May while it added to its Goldman Sachs Group Inc. (GS) position, according to new records released by the mutual-fund giant.

The fund - a one-time industry bellwether that lost some luster last year amid backfiring financial bets - also boosted its holdings in Wells Fargo & Co. (WFC) last month, according to Fidelity's data.

The $22.4-billion Magellan fund has gone back and forth with Bank of America over the last several months. It significantly boosted its stake in the bank last September, for example, then substantially reduced its holdings of the bank months later.

More recently, Magellan has jumped back in. At the end of May, the market value of the fund's stake in Bank of America was $398.6 million, according to the new Fidelity records, making the bank the fund's tenth-largest holding. The value is up more than eight-fold from the amount reported for the end of April.

The bank's stock price rose 26.2% in May, indicating Magellan manager Harry Lange bought at an opportune time. The stock price has climbed further in June.

Goldman was already a big Magellan holding at the end of April, when it was the ninth-largest company in the fund. Goldman moved up to the number six spot in May, though, as the rise in market value climbed nearly 35% to $475 million. Because the stock rose 12.5% on the month, the sharper rise in market value indicates a beefed-up position in the bank.

Among other financial holdings, the value of Magellan's stake in Wells Fargo rose 80% to $349.4 million at the end of May compared with the end of April. The stock rose 27.4% last month, also indicating an expanded position.

The only question now is *how long before my next Harry Lange follow-up post*???

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