Over the year to the end of August 2015, Fidelity Special Values generated a return on net assets of 7.4%, well ahead of the -2.3% return posted by its benchmark. The return to shareholders was even better at 12.4% as the discount narrowed from 6.3% to 2.0%. The dividend was increased from 3.3p to 3.35p.
The manager’s report says the top performer over the year was Electronic Arts, a US games company, bought in 2012 when it was unloved. Positive performance contributions came from a number of medium sized holdings. After being the top contributor to fund performance in 2013/2014, fuel distributor DCC again made significant gains over the year. They say the company’s strategy of buying up delivery assets and integrating them into their existing networks has been progressing nicely, with attractive opportunities on the continent available as integrated oil majors exit these markets, where they have struggled to make a return. Another stock they highlight is Regus, an owner of office space in towns and cities worldwide, and a beneficiary of the transition to more flexible working arrangements. They believe the market has struggled to value the company due to both the effect that opening new offices has on current earnings and its unique business model. This has resulted in the company’s shares being significantly undervalued compared to its potential long term earnings growth.
FSV : Mid cap bias helps Fidelity Special Values