Letter #281: Jamie Harmon (2001)
Fidelity Small Cap Fund Manager | CNBC Appearance
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Jamie Harmon was a Fund Manager at Fidelity, having managed a number of funds over his 24 year career there. He started as an equity analyst before taking on manager responsibility over a number of funds, including the Fidelity Advisor Series Small Cap Fund, Fidelity Low-Priced Stock Fund, Fidelity Small Cap Growth Fund, Fidelity Stock Selector Small Cap Fund, and Select Biotechnology Portfolio.
Today’s letter is the transcript of Jamie Harmon’s appearance on CNBC in 2001. In this interview, Jamie shares his overarching investment philosophy, a macro theme he’s playing, and a specific stock he liked. It’s a short, but highly efficient look at how Jamie thinks about investing.
I hope you enjoy this interview as much as I did!
[Transcript and any errors are mine.]
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Transcript
Host: And we continue our look now at up and coming mutual fund managers. The September issue of Kiplinger Personal Finance magazine picked five young managers off to fast starts. Here's what they all have in common. They're all under the age of 35, they're ambitious, smart, hard working, and they're making money. We head to Boston now to meet Fidelity Small Cap Independence manager, Jamie Harmon. Jamie, good afternoon. Good to see you.
Jamie Harmon: Tyler, thanks for having me.
Host: I'm delighted to have you with us. I guess the first question is, What do you look for in a stock?
Jamie Harmon: Well, I describe my investment philosophy as aggressive value. It's value in the sense that I'm looking for companies that are trading for less than they're worth, but it's aggressive in the sense that I'm looking at healthcare and technology, in a lot of areas where most value fund managers wouldn't go.
Host: And a value manager--aggressive value. Explain what that means.
Jamie Harmon: Well, I guess what I'm trying to do is try to find companies that are trading less than their intrinsic worth, less than the value of the business if you just bought the whole thing for yourself. And then it's aggressive in the sense that I'm not just looking for value in terms of relation to tangible book value, let's say, as Graham and Dodd might have defined it in the 30s, but I'm trying to update those principles for today's economy.
Host: All right, how long have you been running this fund?
Jamie Harmon: I have three different funds. Small Cap Independence I've been running for about four months, Small Cap Retirement I've been running for about 11 months, and Small Cap America I've run for 13 months.
Host: Can you give us some examples of some companies that are typical Jamie Harmon buys? I mean, they don't have to be in your portfolio right now, and I know that Fidelity prefers that you not talk about things you're either buying, selling, or whatever. But give us some examples of things you may have owned that are representative.
Jamie Harmon: Sure. Well, I think other investors have been focused on themes such as photonics and proteomics, things that sound futuristic. I've been focusing on themes that I think are the here and now, things like pudginess.
Host: Pudginess?
Jamie Harmon: Pudginess.
Host: I can get around that.
Jamie Harmon: Oh, sure, I know the feeling too. So, I've owned stocks like The Cheesecake Factory, which is an obvious play, but then also Chico's, which is a retailer of women's dresses, which sells a lot of different types of dresses, but definitely also sells dresses that appeal to larger women. And then also companies like Renal Care Group, which do kidney dialysis services for diet--
Host: That's not part of the--Oh, is that part of the pudginess theme?
Jamie Harmon: Well, sure, because diabetics are more likely to be overweight. So you gotta maybe stretch a little bit. But I think there's a whole broad group of companies that benefit from this trend. So that's one thing.
Host: So low tech is one way to go here, right? I mean, look at what people need, what people buy, and so forth.
Jamie Harmon: Exactly.
Host: Got a couple of other examples?
Jamie Harmon: Sure. Another theme that's been big for me has been education. I think education is a fantastic business. It's scalable, because if I teach one person how to install a computer network, I don't have to increase my cost very much to teach 20 people. Also, it's counter cyclical. If you're unhappy with your present job, as you might be in today's economy, you're more likely to want to go back to school and get some new training. One stock that I've owned is Corinthian Colleges, COCO, which is up about 400% in the last year. I bought it when it was 12x earnings. Earnings have grown a lot and the multiple's expanded. I pulled back on my position a little bit here, but I think that's a great example of the sort of stock I like.
Host: Jamie, thank you very much for coming by.
Jamie Harmon: Thank you so much.
Host: Anyone who will talk about pudginess on CNBC gets to come back again.
Jamie Harmon: All right.
Host: Jamie Harmon, Portfolio Manager at Fidelity Small Cap Independence.
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Wrap-up
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Interesting….
Thanks for this. The photo looks like a doll body. Is that really a photo of Jamie Harmon in 2001??