So how did Bob Stansky beat the
Call it a hunch.
Stansky steered Fidelity's
Magellan to market-beating returns in 1998 and Q1 '99 with
and a sprinkling of other hot Internet stocks. But he didn't come by them in an entirely "traditional" way.
Basic fundamental analysis "only goes so far when many companies are young with new business models and no earnings," Stansky writes in his Q1 report to Magellan shareholders.
"Essentially, I'm trying to find companies that have a real chance to be around in three years and dominate their niches," says Stansky, whose fund beat the S&P in Q1 by 2.4 percentage points. (It's up 11.9% year-to-date -- just around the S&P.) "At the same time, I evaluate investor psychology when it comes to Internet stocks."
"The fact that I increased investments in Internet companies -- and held onto many of them as their prices rose quickly in the fourth quarter -- was due at least as much to my feel for the psychology surrounding these stocks as it was to any numbers-related analysis."
Fidelity's access to hot IPOs couldn't hurt either, though a fund as big as Magellan needs lots of offerings to make a dent in performance.
Here's a look at some of Stansky's latest Net hunches.
There are some small bets (about 40,000 shares each) on
-- two firms that hawk cars online. Ditto
-- which hawks just about everything over the Net, only cheaper -- or at least that's the plan.
Even smaller bets on email host
(19,900 shares) and news and entertainment content provider
(13,700) make up a dash of the fund's $90.1 billion in assets.
Internet service providers
(100,000 shares) and
(79,300 shares) take up a tiny bit more space in the fund's 318-stock portfolio.
, which provides information to healthcare providers over the Net, is represented with 91,400 shares in the portfolio.
But at 14.1 million and 1.6 million shares respectively, it's clearly America Online and
that hold Stansky's heart. Besides Earthlink, they are also the only pure Net plays he's got that weren't initial public offerings in 1999.