What a Week: Stocks Get Oil Change

Danoff's Watch List

Jim Cramer tipped his hat to (FCNTX Quote)Fidelity Contrafund manager Will Danoff on Friday. Contrafund is up 13% so far this year, to rank better than 95% of similar funds, according to Morningstar. It's no surprise, as Danoff has beaten 99% of his peers over the past three years, 97% over the past five and 96% over the past 10.

A former assistant to Peter Lynch and retail analyst who made his reputation calling Home Depot (HD Quote) a buy in the 1980s, Danoff now ranges all over the market to uncover overlooked bargains. During the tail end of the Internet boom, he was loading up on gold stocks. With Fidelity having just released Contrafund's Sept. 30 portfolio, we can see that in the third quarter, he reduced his exposure to the health care, consumer staples and consumer discretionary sectors while upping his investments in energy, materials and utilities.

Cramer discussed some of Danoff's biggest positions like Avon (AVP Quote) and Yahoo! (YHOO Quote), but it's also highly instructive to look at some of the smallest in the $43 billion fund. Fidelity managers like Danoff often open tiny positions in stocks as a sort of watch list to keep closer tabs on potentially interesting developments.

It gets the attention of analysts both inside and outside of Fidelity, who feed more tips and updates to a manager with even a small position. And it certainly gets the attention of corporate CEOs. Danoff told me in an interview last March that he gets many of his best insights from top CEOs in each industry. On a quiet day last January, he called Avon CEO Andrea Jung to chat about prospects in China.

There were 72 new positions under $10 million -- most under $5 million -- added to the fund in the third quarter. That excludes small leftovers of positions Danoff has been liquidating, like $3 million worth of McDonald's (MCD Quote). Also excluded are small positions initiated before the last quarter.

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