BOSTON Aug 6 Two of Fidelity Investments' top
stockpickers unloaded most of their holdings in Valeant
Pharmaceuticals Inc after the drugmaker in April
unveiled its bid for Botox maker Allergan Inc in what is
one of 2014's most contentious takeovers.
William Danoff, who runs the $106 billion Fidelity
Contrafund, a staple in U.S. 401(k) plans, slashed his
Valeant position by 83 percent to about 462,000 shares during a
two-month period that ended June 30, fund disclosures show.
Steven Wymer, who runs the $40 billion Fidelity Growth
Company Fund, cut his position in Valeant by 58
percent to about 1.2 million shares in the one-month period that
ended June 30, fund disclosures show.
So far, it looks like a good move, with Valeant shares down
17 percent since the end of April. Still, Valeant has been a
darling with U.S. fund managers because its stock has surged 723
percent over the past five years amid its growth-via-acquisition
Valeant did not rank as a top holding for either fund. But
the cuts by some of the country's most successful mutual fund
managers reflect concern over Valeant's prospects, fueled most
recently when it cut its earnings outlook for 2014 and 2015.
Working with activist hedge fund manager William Ackman,
Valeant made an unsolicited $47 billion bid for Allergan on
April 22 and sweetened the bid several times since. Allergan
steadfastly rebuffed the planned deal now valued at $51 billion.
A spokeswoman for Fidelity declined to comment, citing the
privately held company's policy not to discuss individual
Danoff's Contrafund has one of the best long-term track
records among U.S. large-cap equity funds, but its year-to-date
total return of 2.9 percent is lagging the 5.1 percent advance
of the benchmark S&P 500 Index, according to Morningstar Inc
data. Wymer's fund, which is closed to new investors, is also a
star in the industry, outperforming 92 percent of peers over the
past 15 years, according to Morningstar.
Jeff Tjornehoj, head of Lipper Americas Research, said Wymer
"also manages to get near the top without subjecting investors
to a wild ride as his fund's price volatility is only slightly
more than the average equity fund."
Ackman, whose hedge fund Pershing Square Capital Management
is Allergan's biggest investor, is trying to call for a special
shareholder meeting to replace Allergan board members with new
directors who might be more amenable to Valeant's bid.
(Reporting by Svea Herbst-Bayliss; Editing by Richard