Fidelity's ProBuild investment stumbles -- filing

* Fidelity parent put up $345 mln to back ProBuild

* Invested in building supply co just before housing slump

* Continued acquisitions amid downturn

By Ross Kerber and Aaron Pressman

BOSTON, Nov 5 (Reuters) - Fidelity Investments' controlling Johnson family may run one of the world's largest financial companies, but when it comes to their own investments, the timing has not always worked out so well.

Fidelity's parent, FMR LLC, has spent $345 million over the past six months to cover losses at ProBuild, one of the largest U.S. building materials suppliers, which it built up at the height of the real estate bubble.

Under a recapitalization plan adopted in May, Fidelity could be on the hook for another $105 million through January 2010, according a confidential prospectus for a recent Fidelity debt offering obtained by Reuters.

Losses have been mounting at Denver-based ProBuild, which operates 470 building supply stores and lumber yards.

Revenue this year is expected to total just $3 billion, half of the chain's total revenue in 2006, when Fidelity assembled the company.

Fidelity paid $1.14 billion for Lanoga Corp, which at the time was the third-largest U.S. professional materials dealer, and $548 million for Hope Lumber, an Oklahoma-based supplier of trusses and other wood products.

Since then, the building sector has been decimated by the collapse in residential and commercial construction.

The shares of publicly-traded building supply retailers have plummeted since the end of 2006. Home Depot Inc (HD.N) and Lowe's Cos Inc (LOW.N) have fallen 36 percent each and Builders FirstSource Inc (BLDR.O) is off 79 percent.

Leveraged buyout firm Bain Capital, part of a group that paid $8.5 billion in 2007 for Home Depot's professional supply unit, said in February it was writing down the value of its stake in the deal by 35 percent.

Fidelity's mistimed bet on building seemed reminiscent of its decision to prop up struggling affiliate Colt Telecom Group SA (COLT.L) in 2001, just as the Internet bubble was bursting.

"They have come up short in a number of important investments," said John Bonnanzio, editor of the Fidelity Insight, a Wellesley, Massachusetts, newsletter for investors in Fidelity funds.

Still, those problems may not matter to most Fidelity mutual fund investors, Bonnanzio said. Privately held Fidelity may be comfortable taking the losses as part of a long-term view not dictated by the constraint of quarterly earnings announcements, he added.