Fidelity Flees Wall Street: Street Whispers

NEW YORK (TheStreet) -- The quarterly flurry of 13F filings from money managers is upon us, and while the latest plays from hedge fund wizards tend to get the most attention, second quarter moves from Fidelity Investments are worthy of special notice this time around.

The mutual fund giant is one of Wall Street's largest clients, and has also been a top shareholder at the biggest banks for many years.

So its especially interesting to see that Fidelity has reduced its holdings in the largest U.S. securities dealers, and not by just a little bit.

Fidelity sold nearly 50 million shares of JPMorgan Chase (JPM), falling from the bank's third-largest shareholder to its sixth largest, according to second quarter regulatory filings by the mutual fund giant tracked by Bloomberg. Fidelity owned just under 78 million shares, or 2.05% of JPMorgan stock at the end of the quarter, down from 128 million at the end of the first quarter.

Fidelity sold a similarly large stake in Citigroup (C) bringing its holdings to 59 million shares from nearly 85 million the previous quarter.

But Fidelity was even more aggressive in unloading shares of Morgan Stanley (MS) and Goldman Sachs (GS) the two "pure play" Wall Street giants. Fidelity reduced its investment in each of those companies by more than 50%.

JPMorgan was Fidelity's largest sale in any sector, Citigroup was third and Morgan Stanley was seventh. And despite those sales, Fidelity's overall allocation to the financial sector remained unchanged relative to other sectors during the quarter.

By contrast, Fidelity upped its bets on retail-focused banks US Bancorp (USB) and Wells Fargo (WFC). Wells Fargo is Fidelity's third-largest holding overall, behind Apple (AAPL) and Google (GOOG).

As is the case with most active managers, it is dangerous to read too much into the moves in any single quarter. For example, Fidelity upped its stake in JPMorgan in late 2011 and at the start of this year. Still, the overall trend since at least late 2009 in not just JPMorgan, but also Citigroup, Goldman and Morgan Stanley, has been for Fidelity to be a seller of these stocks.

Few companies know the ins and outs of Wall Street like Fidelity. When a $600 billion mutual fund giant makes so dramatic a pullback from investing in the securities business, it can hardly be written off as a non-event.

-- Written by Dan Freed in New York.

Follow me on Twitter

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.