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New Fidelity equity fund pairs firm's top managers

Duo has mandate to 'go anywhere' to find value

MONTREAL -- Fidelity Investment's star stock picker Joel Tillinghast doesn't miss a beat when asked about the wisdom of launching a new mutual fund in the midst of a lingering stock market slump, with few signs of life from shell-shocked investors.

"After three years of down market, a lot of people are worried about, 'should I have money in stocks?' But a better time to think about that would have been after three up years."

Just for good measure, he tosses in the well-worn gem from billionaire investment guru Warren Buffett: "Be greedy when others are fearful. Be fearful when others are greedy."

Mr. Tillinghast and fellow Fidelity star Alan Radlo need all the persuasive ammunition they can muster as they pitch Fidelity's latest equity fund, the Canada-only NorthStar Fund.

Robert Haber, the chief investment officer for Fidelity Investments Canada, is happy to provide some assistance with an immodest proposal. "It's an opportunity to put together on one fund, with a wide mandate, two of the best fund managers in North America and the numbers bear that out."

People need only acquaint themselves with the individual track records of the Tillinghast-Radlo duo to want a piece of NorthStar, Mr. Haber argues.

One of the fund's big pluses is the fact Mr. Tillinghast -- manager of the top-rated Fidelity Low-Priced Stock Fund in the United States -- and Mr. Radlo -- former manager of the TrueNorth Fund and a veteran Canadian stock picker -- have proven themselves in both up and down markets, Mr. Haber said.

"People need to have managers who have consistently performed well in both types of markets."

Mr. Radlo and Mr. Tillinghast have a mandate to "go anywhere" in the world in their search for value securities.

So far -- the $172-million fund was launched late last year -- the accent has been on North America, with a relatively hefty Canadian weighting.

Right now, NorthStar is roughly 40-per-cent U.S. equities, 20-per-cent Canadian, and 8-per-cent foreign, with the rest in cash, Mr. Radlo said.

The accent is on small- and medium-sized companies.

"It's not an aggressive equity fund. It's a long-term fund" that won't suddenly jump on gold stocks because "they're going to the moon or something," he added.

"I don't want people to think this is a miracle worker type of fund."

He particularly likes Canadian junior oil patch companies that are increasing their reserves and production profile while keeping their balance sheets in check.

He also likes the retail sector here, notably grocery chains Metro Inc. and Sobeys Inc., as well as convenience-store giant Alimentation Couche-Tard Inc.

Another favourite -- "we have a big position," Mr. Radlo says -- is Quebec toy maker and Lego rival Mega Bloks Inc., which listed only last year with a highly successful initial public offering.

Among the top-10 list of picks are a bunch of U.S. stocks, notably health care providers Health Management Associates Inc. and Renal Care Group.

Both Mr. Tillinghast and Mr. Radlo could boast in 2002 that their respective funds had not posted a negative return in 10 years.

Boston-based Fidelity, the biggest mutual fund company in the United States, is a unit of privately held FMR Corp.

© 2007 The Globe and Mail. All rights reserved.

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