Kepler Research on Fidelity Special Values, November 2024

Fidelity
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Alex Wright, the manager of Fidelity Special Values (LON:FSV), which celebrates its 30th anniversary this year, takes a contrarian investment approach, focusing on finding overlooked and undervalued opportunities across the whole UK market-cap spectrum. This approach drives Alex to seek investment opportunities in areas of the market that are often ignored by his peers.

Alex’s contrarian approach has proven effective over both the long term and more recent periods, with FSV outperforming its benchmark over numerous timeframes. For instance, the trust has outpaced the FTSE All-Share Index over one and five years, and has delivered c. 1.5x the annual returns of the index since Alex’s appointment in September 2012 and c. 1.7x since the trust’s launch in November 1994. Notably, FSV has also been the best performing investment trust in the AIC UK All Companies sector over the past five years.

Despite the strong performance in both the short and long term, the shares of FSV continue to trade at a c. 9% Discount, which is wider than the five-year average of 4.2%. FSV has historically traded at a premium rating to the sector average, though this has notably narrowed over the past c. 18 months.

Whilst the past 12 months have been a strong period for UK equities, they remain at lower valuations than their international counterparts. Alex believes they remain attractive in the current uncertain macroeconomic environment leading to a Gearing level of c. 8%, slightly below the five-year average.

FSV primarily focuses on capital growth, but still pays a Dividend with a historic yield of c. 2.8%. It also has a 14-year track record of dividend growth, while the dividend has grown c. 19% annually between 2014 and 2023.

Fidelity Special Values PLC (LON:FSV) aims to seek out underappreciated companies primarily listed in the UK and is an actively managed contrarian Investment Trust that thrives on volatility and uncertainty.

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