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London: Fidelity International's Sanjeev Shah, who took over the $6 billion UK Special Situations Fund from Anthony Bolton at the start of the year, said collapsing stocks are helping him buy banks on the cheap.
Shah has increased his holding of banks over the past three months to about 20 per cent of the portfolio, and bought more shares in HSBC Holdings and Alliance & Leicester. He is also added to consumer-related stocks, another segment of the market that is suffered over concern about a slumping economy, and in the past three weeks boosted his holding of caterer Compass Group's. He is selling oil stocks.
"The decline has created opportunities,'' Shah, 37, said. The declines have hurt "financials across the board",' he said.
The fund is allowed to take some short positions, which means it can bet on falling stocks. Fund managers tend to boost short positions when they expect markets will decline and reduce those positions when they expect markets may start to rise.
Shah's predecessor Bolton said in May last year he had taken short positions in the fund because he expected the market to fall. Shah declined to outline the amount of short bets in the fund at the moment.
"Clearly if I think there are more opportunities in the market, that might have changed,'' Shah said.
Shah's fund has fallen eight per cent so far this year compared with a 13 percent decline for the FTSE All-Share index, according to data compiled by Bloomberg.
Shah said he invested in HSBC, Europe's biggest bank, because of its growing business in Asia. The company, which has fallen 16 per cent this year, said in Nov-ember it planned to get 60 per cent of its pretax profit from emerging markets.
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