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Rating:Fidelity Bets On, and Helps Hedge Funds Short, BP Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, July 19, 2010

Fidelity Bets On, and Helps Hedge Funds Short, BP

News summary by MFWire's editors

Fidelity watchers and fundsters interested in mutual funds engaging in securities lending may want to take a look at an article today on Portfolio.com. The Boston Business Journal's Tim McLaughlin reports that the Fidelity Diversified International Fund loaned out shares of BP at the end of April as the oil spill in the Gulf of Mexico started to take its toll on the British oil titan.

Lending out BP shares (probably to short-selling hedge funds, McLaughlin mused), together with other securities lending (a total of $3.2 billion worth of stock ten days after the spill began) netted the $31 billion fund $6.2 million in "extra income" between October 31, 2009 (when the fund had no BP shares out on loan) and April 30, 2010. Also as of April 30, the fund owned 6.7 million shares of BP (at $52.15 per share on April 30, those shares were then worth about $349.4 million).

Fidelity spokeswoman Anne Crowley pointed out to McLaughlin the shareholder benefits of securities lending (namely, extra income) and the restrictions and controls Fidelity places on the practice. Ed Blount, executive director of the Center for the Study of Financial Market Evolution, also weighed in for the story. 

Edited by: Neil Anderson, Managing Editor

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