“For example, Chime Communications is the only position that has always been in the smaller companies fund, and it has just been bid for by WPP, so I have seen value in that for a long time, but it has taken longer than expected to pay out.”
Oil, toil and trouble While acknowledging that equity valuations are looking above average, Wright insists he is still able to find plenty of opportunities. Oil, for example, is a sector that makes up around 9% of Special Situations.
He says: “Shell/BG is the biggest position, even at $60 (£38.2) per barrel oil as a long-term floor the dividend is definitely payable from cashflow in three or four years’ time, once Brazil and the QCLNG pipeline have ramped up fully, including the cost and capital expenditure cuts I would expect in that environment.
“If oil doesn’t recover, you have still got a very strong, close to 7% dividend yield there, and if it does recover there is clearly a lot of valuation upside as well.”
Investors have questioned how Wright will do things differently from his predecessors he stresses there are many similarities between his and Shah’s contrarian value approach, which goes back to the days of Bolton.
However, Wright adds: “I have a more mid and small-cap bias than Sanjeev as today 50% of the fund is in sub-£5bn companies and historically that might have been 35-40% of the fund.
“Like Sanjeev, I favour financials although, if anything, I have slightly increased the fund’s exposure to banks. “I have also reduced the media position compared with Sanjeev, though I think that was more a reflection of those positions having worked and done very well, and I think he would have done the same if he had stayed on the fund.
“The likes of ITV were strong performers for the fund and so the valuations were no longer as attractive.”
Still, if he needs their support, Wright reveals that both Shah and Bolton still have part-time roles at Fidelity and are happy to pass on their experience and assistance.
Having also joined the firm from a young age, there is every reason to believe that Wright is in it for the long haul.
