Fidelity's Feingold Dishes on Funds, Analysts, and Stock Picks
Carole Winkler (RA), Associate Editor, News and Campus Affairs
Issue date: 3/8/04 Section: News
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A veteran Fidelity portfolio manager visited the HBS campus on February 24 to give students a snapshot of the company's research operations. Jeff Feingold, (HBS '87), serves as Co-Director of Research for Analysts within Fidelity Management & Research (FMR), a position he accepted just four months ago. Formerly, he managed the firm's Select Aerospace and Defense Fund, the Select Home Finance Fund, the Select Financials Fund, and the Select Air Transportation Fund.
"There really isn't a formula" for picking stocks, Feingold says. Portfolio managers with a 60 percent success rate are considered quite good. Fidelity "brings in bright people" and switches analysts around every two to three years to generate fresh ideas, he said.
The privately held mutual fund giant must be doing something right; their earnings jumped 12 percent in 2003 to $908 million.
Feingold described how a Fidelity analyst goes about finding undervalued companies. There are two drivers of stock price: earnings growth and price/earnings (PE) expansion. Of those, earnings growth is far easier to analyze, so analysts delve deeply into those numbers. They may take a top-down approach - deciding whether the industry is an attractive one or not - or a bottoms-up view, trying to figure out who the winners and losers will be 20 years from now in a particular industry.
Since stock picking is both an art and a science, analysts approach the task differently. Feingold leans toward scientific methods, while others comb magazines looking for hot consumer trends, new ideas, cultural changes, and breakthrough technology. The best analysts, says Feingold, are able to anticipate changes before they happen by talking to customers, suppliers, and other company sources.
Students peppered Feingold with questions. Given how difficult it is to beat the market over the long term, how could he make the case for actively managed mutual funds? Feingold replied that it's his job to find those portfolio managers who can beat the market over the long term, "and we hope we get more than our fair share."
"There really isn't a formula" for picking stocks, Feingold says. Portfolio managers with a 60 percent success rate are considered quite good. Fidelity "brings in bright people" and switches analysts around every two to three years to generate fresh ideas, he said.
The privately held mutual fund giant must be doing something right; their earnings jumped 12 percent in 2003 to $908 million.
Feingold described how a Fidelity analyst goes about finding undervalued companies. There are two drivers of stock price: earnings growth and price/earnings (PE) expansion. Of those, earnings growth is far easier to analyze, so analysts delve deeply into those numbers. They may take a top-down approach - deciding whether the industry is an attractive one or not - or a bottoms-up view, trying to figure out who the winners and losers will be 20 years from now in a particular industry.
Since stock picking is both an art and a science, analysts approach the task differently. Feingold leans toward scientific methods, while others comb magazines looking for hot consumer trends, new ideas, cultural changes, and breakthrough technology. The best analysts, says Feingold, are able to anticipate changes before they happen by talking to customers, suppliers, and other company sources.
Students peppered Feingold with questions. Given how difficult it is to beat the market over the long term, how could he make the case for actively managed mutual funds? Feingold replied that it's his job to find those portfolio managers who can beat the market over the long term, "and we hope we get more than our fair share."