Fidelity Contrafund cut Apple stake 3 percent in December

BOSTON Wed Jan 30, 2013 9:58am EST

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BOSTON (Reuters) - Portfolio manager Will Danoff, whose $85 billion Fidelity Contrafund is the largest active shareholder in Apple Inc, trimmed his holdings in the maker of the iPhone by 3.1 percent in December.

Apple remains the top holding in Contrafund, according to the latest disclosures by Boston-based Fidelity on Wednesday. Under Danoff, Contrafund has been the best performing large-cap growth fund over the past 20 years, posting an annual total return of 10.59 percent, according to Lipper Inc, a Thomson Reuters unit.

The modest trimming and Danoff's recent comments about Apple indicate he still likes the stock, although U.S. retail investors have soured on it.

Weak holiday sales of Apple's iPhone helped to spark a selloff that lopped some $50 billion off the company's market capitalization in one day of trading last week.

Contrafund reported holding $6.15 billion worth of Apple stock at the end of December. That translates into 11.56 million shares, compared with the 11.92 million shares reported at the end of November.

Apple accounted for 7.3 percent of Danoff's holdings, down from 8.2 percent at the end of November. Contrafund is Apple's second largest shareholder after the Vanguard Total Stock Market Index Fund.

With more competition from rival smartphone makers such as Samsung Electronic Co Ltd, Apple shares are off 35 percent since hitting an all-time high of $705.07 in late September. Apples shares slipped 0.3 percent to $459.68 in early trading on Wednesday.

Still, in a Fidelity Viewpoints interview posted January 16, Danoff extolled the virtues of Apple's cash-generating power.

"Apple has been generating a billion dollars of free cash flow per week," Danoff said. "In the last two years, the company has added $100 billion of revenue without needing any additional working capital."

But Danoff also acknowledged the stock slide and stiffer competition.

"The stock has been disappointing in the last quarter or two," he said in the Fidelity Viewpoints interview. "Competition has definitely intensified in the smartphone and tablet markets."

Contrafund posted a 6.51 percent return in the fourth quarter, barely beating the 6.35 percent advance in the benchmark S&P 500 index.

Danoff got help from other technology holdings and an overweight position in gold mining companies, betting that unprecedented levels of global debt will support prices in the precious metal.

(Reporting by Tim McLaughlin; Editing by Jeffrey Benkoe)

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