Is Fido Mulling a Sale?
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Monday, May 09, 2005

Is Fido Mulling a Sale?

Does syndicated MarketWatch fund columnist Chuck Jaffe know something the rest of us do not? Or, is he just spinning straw to gold with his Sunday column speculation that Fidelity is on the auction block.

Jaffe used the column to guess that Fidelity recent personnel moves are really part of an effort to prep the fund giant for sale and not, as its executives said, an attempt to broaden Abigail's experience.

Jaffe does not just speculate on a Fidelity sale, he also pounds the table with a buyers' name. Who is it? Bank of America, of course.

What is missing from Jaffe's story is any sourcing, either on the record or off. There are no unnamed industry sources, consultants or even little birds. Indeed, he quickly back peddles and covers himself by stating that "Fidelity could roll on, largely unchanged, for years; no one in the firm will utter even a hint of any plans for a future that doesn't include ownership by the Johnsons."

He adds that "Officially, Fidelity says it is not considering any deals and considers private ownership one of the company's strengths." He does not provide us with what Fidelity unofficially said.

Well, O.K. then.

So how does Jaffe put two and two together to come up with a sale from Abigail's recent move to head FESCo?

That promotion, he claims, will not just give Fidelity's heir apparent the opportunity to learn new skills by running Fidelity's most important (and complex) unit, it will also put her in charge of overseeing the firm's most important relationships.

The is not sure how that adds up to "Fidelity is planning a sale," but maybe Jaffe has learned something we haven't and has to protect the source by not even hinting that a source exists (that does happen, sometimes).

So, who is going to buy Fidelity?

"If you look hard enough into the service business, a likely dance partner comes into focus: Bank of America," writes Jaffe.

Jaffe points out that the two firms are "as thick as thieves" on everything from executing trades to marketing bonds to operating Web sites for BofA's accounts. He also points out BofA's failure to build its fund group (forget for the moment about the old Fleet/Liberty funds).

"It's pure speculation right now, but it's not as far-fetched as it might seem," adds Jaffe to convince us some more.

O.K. again. Speculation and business ties are as good a basis to guess on a deal as any, especially for a reporter on a tight Sunday deadline. Maybe you could even bet on it. As Giacomo showed in Saturday’s Derby, sometimes long shots do pay off.

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