New wingman for Fidelity star Danoff could be his successor

BOSTON Thu Sep 19, 2013 3:25pm EDT

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BOSTON (Reuters) - Fidelity Investments' superstar portfolio manager Will Danoff has a new partner helping him run $120 billion in assets and there is a chance this wingman could become his eventual successor at the giant Contrafund.

Several months ago, Danoff asked for New Millennium Fund manager John Roth to be assigned as co-manager of the $23 billion Fidelity Advisor New Insights Fund, sometimes called "Son of Contrafund".

To many, it was a sign Danoff had handpicked a potential successor, much in the same way he sizes up big bets on future stars in the stock market.

Fidelity made Roth's bigger role public this week, raising questions about whether it was an eventual stepping stone to be Danoff's successor on the $97 billion Contrafund.

"We are formalizing a pretty powerful informal relationship," said Brian Hogan, president of the equity group at Fidelity. "This was Will's decision and I emphatically supported it."

Hogan said the 53-year-old Danoff remains hungry and committed to Contrafund.

"I don't expect Will to come to me and say, 'Gee, Brian, I'm ready to ride off into the sunset," Hogan said. "I expect he'll be doing this five, seven, 10 years and beyond."

Roth's bigger role can't be ignored because Danoff has flown solo for years, currently managing $120 billion between Contrafund and New Insights.

When asked if he could be in line to succeed Danoff, Roth was speechless for a moment.

"That's really too hard for me to reason," said Roth. "This new role on New Insights is a great opportunity for me, and we'll take it from there."

Danoff, 53, has run New Insights for a decade. He is best known for his 23-year run at Contrafund. Over the past 20 years, Contrafund is No. 1 out of 53 large-cap growth funds with annualized returns of 10.33 percent, as of August 31, according to Lipper Inc data.

Roth has sat next to Danoff for several years. They travel together when they scout companies and Roth has learned Danoff's habit of mixing hot chocolate with coffee.

"They have a great chemistry," Hogan said.

The two men constantly talk about stocks and they also are a study in contrasts. Danoff isn't known for being neat. By all accounts, his office is a mess and he sometimes wears clothes that show their age.

Roth has a shaved head, dresses sharply and has a ready smile. When he followed utility companies, he said he would take his wife to scout power plants.

"She was glad when I started covering media companies. That meant Hollywood and I started reading People magazine," he said.

Roth made his bones - and a ton of money for Fidelity investors - for his call on Google Inc's 2004 initial public offering as an analyst. He worked closely with Danoff in evaluating the company, which showed signs of slowing growth in the quarter before the IPO.

"I told the trading desk to buy Google at $100, but our entire order was filled at $85," Roth recounted. "I didn't know if that was good or if I was going to lose my job."

Nine years later, Roth's place at Fidelity looks secure. Google on Thursday traded at nearly $900 a share. Google also is Danoff's biggest position in Contrafund, a holding worth nearly $6 billion at the end of July.

(Editing by Andrew Hay)

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