William Danoff, the manager of the $32.2 billion Fidelity Contrafund (FCNTX), calls himself a “good-news guy.”
He buys stocks based on news of large corporate stock buybacks, regulatory changes, initial offerings or mergers, he said. “I’m looking for good news like improved earnings growth potential, plus cost cutting or new management,” Danoff added from his office in Boston.
He said he is more focused on a company’s fundamental quality than on its current share price. “Over the long term,” he said, “the price is forgotten but quality remains.”
Earnings growth is important, he said. He buys shares of companies that he believes will generate average annual earnings growth of at least 15% to 17% over the next five to ten years.
In June, Fidelity Investments made permanent its waiver of the 3% front-end sales charge, or load, on Contrafund shares.
The fund, which can buy stocks of any market capitalization, is highly diversified, holding about 500 stocks. Over all, the average weighted market capitalization of the portfolio companies was $27.8 billion at the end of June; companies with market caps of less than $10 billion accounted for about 45% of assets.