Sun, Aug 19, 2001 - Page 10 News List

Fidelity boosts its stake in EMC as some cut holdings

MUTUAL FUNDS Even as Janus, Putnam reduced their holdings in the manufacturer of data storage systems, the fund decided to increase its stakes in technology

BLOOMBERG , BOSTON

Fidelity Investments boosted its stake in EMC Corp in the second quarter, while rivals Janus Capital Corp and Putnam Investments both slashed their holdings in the No. 1 data storage systems maker.

Fidelity's EMC purchases came amid a tilt toward technology for the biggest US fund company, whose top three stock buys in the quarter were Microsoft Corp, AOL Time Warner Inc and chipmaker Intel Corp, according to Thomson Financial/Carson, which compiles Securities and Exchange Commission filings.

Fidelity's stock funds have declined less, on average, than those of Janus and Putnam over the past year because many didn't invest as heavily in high priced technology shares. While Janus and Putnam have slashed tech holdings to improve performance, Fidelity managers have showed signs of edging back to the sector.

In buying Microsoft, Intel and EMC, "it would be hard to argue against the fact that Fidelity growth managers at least are beginning to bottom fish," said Jim Lowell, editor of Fidelity Investor, a monthly newsletter based in Needham, Massachusetts.

Fidelity bought 21 million EMC shares in the second quarter, raising its stake in the company to 64.2 million shares, according to an SEC filing. EMC shares have lost three-quarters of their value this year as slower spending by corporate customers has hurt sales and profit.

Boston-based Putnam dumped 18.4 million EMC shares, reducing its stake in the company by 61 percent to 11.8 million shares.

Janus sold 18.2 million EMC shares, cutting its holding by 28 percent to 46.4 million shares. EMC represented Putnam's second largest stock sale in the quarter, and Janus's fifth largest sale, according to Thomson.

"Some of the most aggressive funds have probably been seeing redemptions that have been prompting the selling in some of these more aggressive names," said Christine Benz, senior analyst at fund tracker Morningstar Inc.

Growth stock funds managed by Janus and Putnam have been hammered by their exposure to stocks like EMC, which fell by 28 percent on July 6 after the company said second-quarter profit would trail analyst forecasts.

The US$17.4 billion Janus Twenty Fund, which counted EMC as its sixth biggest holding as of April 30, has lost 28 percent this year and 47 percent over the past 12 months.

The US$4.3 billion Putnam Growth Opportunities Fund, which listed EMC as its fifth biggest holding at the end of last year, has fallen 29 percent this year and 49 percent over 12 months. Overall, stock mutual funds run by Janus and Putnam have lost 37 percent and 25 percent, respectively, over the past year, according to Bloomberg. Stock funds run by Fidelity have fallen an average of 15 percent.

Investors have withdrawn US$4.8 billion from Janus's retail stock and bond funds this year through June and have added just US$219 million to Putnam's funds, according to Boston-based Financial Research Corp. In the same period last year, the two fund firms attracted US$48.5 billion in new cash.

Fidelity has gained US$7.4 billion in new cash this year through June, topping the US$6.9 billion it attracted in the same period last year, according to FRC.

Microsoft Corp was the top stock purchase for both Fidelity and Janus in the quarter, according to Thomson. Fidelity fund managers bought 31.7 million Microsoft shares, worth US$2.3 billion, in the quarter, making it the company's top stock holding.

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