WSJ Fund Track Focus on Fidelity's Long Bets on Longtop
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Thursday, June 09, 2011

WSJ Fund Track Focus on Fidelity's Long Bets on Longtop

Are mutual funds exposed to the potential shannanigans coming from China? Thursday's column looks at some mutual funds (and hedge funds too) that have invested in shares of Chinese companies with stock listed on U.S. exchanges that have drawn SEC scrutiny. The topic was brought to the fore by the SEC's recent declaration that it is investing the filings and statements made by some Chinese companies concerning their finances and operations. Stocks a dozen Chinese firms have been halted from trading as the SEC investigates.

One of the halted stocks is Longtop. The paper points out that Fidelity [see profile] is Longtop's largest shareholder with a 14.5 percent stack in the firm based on Capital IQ's numbers. Its stake is held through two mutual funds: Fidelity Advisor Global Capital Appreciation and Fidelity Advisor Mid Cap II, the paper reports based on unidentified sources. The shares do not represent a sizeable portion of either fund.

Putnam Investments and Janus Capital also have stakes in Longtop, according to the paper, though it did not disclose the size of those holdings.

The WSJ also reports that Vanguard Group holds a stake in another of the Chinese firms being looked at by the SEC, though it did not identify the Chinese company, which Vanguard fund held it, or the size of the position. The paper did quote a Vanguard spokesperson saying that the holdings are part of its passive index funds portfolios.

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