Fidelity Slashes Stakes in Petrochina, Sinopec

Fidelity slashed its stake in PetroChina (PTR) and Sinopec (SHI) amid calls for the Boston mutual fund giant to divest its holdings in companies linked to Sudan.

According to documents filed with the Securities and Exchange Commission on Tuesday, Fidelity held 420,916 ADRs in Petrochina as of March 31. That was down 91% from 4,499,975 shares at the end of December.

The filing also indicates Fidelity had cut its stake in Sinopec ADRs to zero and the end of March from 42,000 at the end of December.

Fidelity declined to say whether it cut its holdings in response to pressure from human rights groups. A spokesman said the company's individual fund managers make their own investment decisions.

"Fidelity appears to be listening to the concerns of American investors who do not want their money tied to investments that help support the genocide in Darfur," said Eric Cohen, chairpman of Fidelity Out of Sudan, a a divestment campaign based in Boston.

However Cohen said Tuesday's filing presents an incomplete picture of Fidelity's investments because it doesn't include information about the company's holdings of H shares on the Hong Kong exchange. He said the majority of Fidelity's holdings in PetroChina had been in the form of these shares.

"Since Fidelity has made no statement or commitment regarding divestment from PetroChina, investors entrusting their money to Fidelity mutual funds continue to risk inadvertently investing in PetroChina and other companies helping to fund the genocide in Darfur," Cohen said.

Fidelity's move comes as a growing number of colleges, universities, cities, and states have been taking action to divest their holdings of various companies doing business in Sudan. Fidelity Out of Sudan says some 42 schools have already announced divestments, beginning with Harvard in 2005. Similarly, 13 states have made the decision to divest, such as California in September 2006.

Other big investors have defended their decision to invest in PetroChina and other companies doing business in Sudan. Warren Buffet's Berkshire Hathaway (BRK) released a statement in February saying it agreed that conditions in that country are deplorable and sympathizes with people who want to remedy them. "We believe, however, that they are wrong in both their analyses of PetroChina's connection to these conditions and their belief that our divesting our PetroChina holdings would in any way have a beneficial effect on Sudanese behavior."

>To order reprints of this article, click here: Reprints