Stock Picking Silly Talk

Will Danoff, whose $109 billion Fidelity Contrafund has been hit hard thanks to some big bets on the cloud-computing momentum names this year, isn’t quite giving up on the space yet. He’s sticking with the big names in social and tech for now.

via Reuters:

Contrafund had an $8.8 billion position in Google Inc and a $2.6 billion stake in Facebook Inc at the end of February, according to the latest available fund disclosures.

Danoff still gives both companies a vote of confidence.

He described Google’s Internet search engine as a proxy for human curiosity.

“Do I want to underweight human curiosity? I don’t think so,” Danoff said.

Meanwhile, he conceded that Facebook’s February announcement that it would spend $19 billion in stock and cash for WhatsApp, a mobile texting company, raised doubts about Mark Zuckerberg, Facebook’s founder and chairman.

“Should I doubt a 29-year-old who’s running a $150 billion company?” Danoff said. “He saw an important asset and he sees the future more clearly than I do. He thinks it (WhatsApp) is worth it. Well, we will see.”

Danoff’s got a great long-term track record and he’s really good at stock picking. But I think there is a limit to how much fundamental research a team can do – and that at a certain point successful stock picking comes down to gut instinct, luck, good timing and other intangibles. Whatever they are, Danoff has had them in spades over the course of his career.

Which is why silly explanations about being not being “underweight human curiosity” can be safely ignored. For a PM, it’s hard to explain to a reporter exactly what you see in an investment opportunity sometimes. The numbers are the numbers. But then there’s always something else that can’t quite be quantified or articulated. I’m sure there’s a lot more rigor involved here, for example, than “Well, we will see.”

Source:

Exclusive: Fidelity’s Danoff looks beyond tech stocks as performance lags (Reuters)