The depth and breadth of Fidelity's analyst team, with additional expertise from dedicated shorting analysts, help to uncover investment ideas in overlooked and unloved parts of the market.
Key takeaways
- Today’s stock markets are split between companies whose share price reflects reality and those that seem to exist in a fantasy world.
- My strategy is to own out-of-favour companies with turnaround potential and short those with unjustifiable valuations.
- Fidelity’s research helps me uncover the former and see through the hype surrounding the latter.
Download the Analyst Survey 2026 PDF
Markets are bifurcated. In some areas - autos, chemicals, non‑AI industrials - prices reflect underlying fundamentals and a tough economic backdrop. Elsewhere, valuations exist in a fantasy world, fuelled by speculative flows into stocks with no fundamental underpinning. The AI theme is the obvious headline, but the excess extends to areas such as quantum computing, crypto, and nuclear.
Fundamental grounding
My approach is premised on the belief that over the long-term valuations converge to underlying fundamentals. As such, my process is grounded in bottom-up analysis. I draw on Fidelity’s extensive in-house research and privileged corporate access to help inform my views on each company in the portfolio – both those which I am long, and those which I am short.
My long book focuses on out-of-favour companies that the market considers broken or mismanaged, but where I see turnaround potential.
As a contrarian, my positioning may be at odds to the recommendations of the analysts – either my view of the future is different, or in the time horizon I am looking to is longer. But their rigorous analysis of companies is essential.
Where I’m short: speculative hype
Today my short book has a strong thematic focus – companies with lofty valuations which often lack credible business models and the ability to generate revenues. These names have rallied as speculative enthusiasm has continued to build. Fundamentals and valuations have become completely disconnected.
I work with dedicated shorting analysts who provide deep technical expertise to expose what the market has overlooked. One such company develops small modular reactors using highly enriched uranium. That technology was developed in the 1960s and still has not proven its worth in the real world, but because it fits within thematic baskets, passive flows drive erratic stock moves.
Another position is a satellite maker that came to my attention via one of our shorting analysts. There’s a lot of hype around this sector at the moment, which is driving in retail money. However, the company appears to be banking on a total addressable market that I don’t think exists, plus it’s relying on some miracles on its supply side just for it to earn back its cost of capital. As the lack of commercial viability plays out, the downside correction could be sharp and extreme.
Ultimately, I do not look to time market catalysts. But in recent weeks and months, the strong performance of key positions in the short book suggests that any sustained market rationalisation would prove beneficial for the fund’s performance.
I also don’t try to balance or moderate my approach. I stay true to my philosophy, regardless of what the market is doing. When conditions are normal, the fund looks fairly conventional: a collection of stock-by-stock idiosyncratic stories. When bubbles form, over time the portfolio becomes more extreme in the opposite direction. This is the environment we are in today.
