FidelityConnects: Introducing Fidelity Global Opportunities Long/Short Fund

Discover a new way to think about global investing. Join Portfolio Managers Max Adelson and Nicolas Bellemare as they introduce Fidelity Global Opportunities Long/Short Fund — a strategy designed to go beyond traditional equity investing. This globally diversified core approach taps into Fidelity’s powerful research network to uncover opportunities across regions, sectors and market caps.

Transcript

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Hello, and welcome to Fidelity Connects.

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I'm Pamela Ritchie. Markets don't move on facts alone,

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of course. They move on narratives.

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And our next guest today, our guest today say

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that some of the best investment opportunities emerge when

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those narratives are wrong.

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They believe that change creates opportunity, whether

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that's driven by geopolitics, technology,

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or evolving global supply chains.

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With the launch of Fidelity Global Opportunities Long Short

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Fund, they're bringing that philosophy to life through

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an alternative strategy that can help navigate changing

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conditions across market cycles.

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And behind their strategy is a partnership of more than 15

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years in the making. We'll get into that.

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Joining us here today to introduce Fidelity's latest product,

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Fidelity Global Opportunities Long-Short Fund,

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are the portfolio managers, Max Adelson and Nick

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Belmere. Welcome to you.

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Great to see you both. Thank you, Pamela.

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Delighted to have you here today.

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We'll invite everyone to send questions in over the next

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little bit. Okay, let's talk about this 15 years in the

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make, so you met...

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Where? You've been working here for a while because I've seen

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you both here, but what about before that?

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Well, my involvement with the stock market started even

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before a partnership.

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I was interested in stock markets really early, but my first

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stock when I was 14 and...

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14? Yes, yes. I read every book I could find about it.

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One that stood out was Peter Lynch.

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He had this line, go find a great business that's growing,

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but that's in a really boring industry.

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And I took that to heart and found a little collision repair

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shop chain based in Winnipeg, 100 million market cap.

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And I called the CFO with a couple of questions and he,

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you know, to my surprise, he took the call.

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I think he was excited.

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Someone was interested by the company.

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Little did he know I was a student with a hundred dollars to

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invest. But I really like what I heard.

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I bought the stock and this turned out to be my first and

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only so far a 30 bagger.

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So that was a big winner.

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And I was hooked.

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You know, since then, my quest to find the next big winner in

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the stock market has never stopped.

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And along the way, it's brought me, as you mentioned, to...

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McGill study finance and that's where I met

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Max and you know, Max, how did you end up at McGill?

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It works really hard in second grade.

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Well, when I was young I loved meteorology.

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I loved the weather. I followed it.

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I was a nerd. And I decided to go to McGill to

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be a meteorologist.

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And it was there that I discovered that the weather and

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investing have a lot in common.

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They both involve analysing lots of data and they both

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involve forecasting.

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So I decided to switch from science to management.

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And that's where I met Nick and Pamela.

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I very intimidated by Nick here, because as

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he's been saying, he was investing for a long period of

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time, he had bought and sold many stocks, he has his own

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investment blog called Bourse Investir that I started

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to read, and he was a member of all the investment clubs

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across campus. So.

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How many were there across campus.

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There must have been three or four.

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He was involved everywhere.

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Everyone knew Nick and so I decided that I

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wanted him to be one of my mentors and I followed him

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into the investment management programme at McGill.

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That was the student-run programme called Days

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Hotel Capital Management. We had two million dollars to

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invest with a global mandate.

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We got to travel the world together to meet our investors

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and talk about what we were doing in the

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fund. And uh...

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This is all, like, still in university.

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This was still in university.

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Nick decided to take that experience and start with a summer

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internship at Fidelity. I followed him for full-time.

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That was in 2012.

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We've spent 10 years together as analysts here covering

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different sectors from financials to healthcare to technology

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and in 2023 we had the opportunity to

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start with the blank sheet of paper, a new mandate, and

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it brought us full circle to what we started with, something

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global. This time we're supported by

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massive infrastructure here at Fidelity.

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We have an incredible research team, great peers,

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and we have the opportunity to work together again for

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our investors.

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Fantastic. OK, so tell us a little bit about this fund.

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Nick, let's begin with you. So it's a long short fund.

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You can put your great ideas to work in the long side of

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things, and those that you put in the basket

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actually go into the short side of it.

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Is it a 130-30?

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How does that work? Give us some of the deets here.

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Perfect. Yeah, global long short strategy.

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Let's break it down.

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So the first thing to keep in mind, and we really see this as

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an equity strategy, we tend to run with a fairly high net

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exposure. So you asked long and short, we've typically

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run about a hundred percent long and 35%

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short and in those areas.

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So we believe having a net a high net

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exposure is important because the stock market

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is the best way to compound wealth over time.

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But obviously we do it very differently from an index

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fund or even a traditional long only fund because we can

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benefit not only from stocks going up on the long side,

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but also capitalise on stocks going down in the short

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portfolio. And we found that's been a differentiated source

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of return, it adds to our returns.

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And it has also buffered some of the volatility in the

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choppy market.

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Interesting. Okay, so it's been in a pilot stage for the

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last, how many years?

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Three years.

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Three years. Okay, can you tell us a little bit about the

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performance? I mean, it's been a wild three years, how is it

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done?

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So fortunately, we've had very strong performance over the

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three years of the pilot. We've managed to outperform our

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benchmark, the MSCI world with lower volatility.

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Now in 2023, it started, it wasn't the easiest

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start. In hindsight, I think it was the best thing that could

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have ever happened to us.

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For the first few months we were trailing and it forced Nick

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and I to dig deep and reflect on what we wanted to

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keep the same and what we want it to change and how we were

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gonna work best together.

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What we decided to do was double down on our global

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research team and figure out where the very

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best ideas were on both the long and the short side.

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When portfolio managers interact with analysts, they often

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ask, what are your best ideas?

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Nick and I have the pleasure of also asking, what are you

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worst ideas? And we can put those to use in the

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portfolio. We also drew upon some of our prior

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experiences.

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Nick had the fortune of covering Valiant Pharmaceuticals,

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which was a very topical name in the Canadian market when

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he was an analyst.

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Those are the kind of situations where we find there are

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very interesting returns to be generated on both the long and

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the short side. Maybe Nick, you wanna share a little bit with

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us about what you learned during that period and how we put

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that to work in our portfolio.

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Are we talking about sort of the blow up of it eventually and

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how that ultimately works?

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Oh, and the Valiant story.

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Yeah, that was that was such an interesting experience so

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early in my career as well.

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Right. That was part of my first package.

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And that company was really interesting.

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CEO at a different view was a consultant.

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Farmer companies are spending too much on R&D.

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So, you know, I'll put that to work.

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I'll consolidate the industry, cut costs and print money.

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And he did essentially. I remember we made a lot of money on

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that stock. It went from $60 to $300 as he

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put that playbook to work right.

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But that story was starting to shift, right?

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We saw some of the red flags piling up, the leverage

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increasing, the business practises more aggressive, the

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accounting more creative.

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But one thing I've learned early is when the story has a lot

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of momentum like this, you don't want to get in the way too

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early. It's best to wait for a crack to emerge.

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And that crack, I remember, still emerged when the report

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came out, basically accusing them of fraud,

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spent a long night analysing all that, reading reports,

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calling pharmacies, regarding the management.

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And just realising the story that everybody

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was, you know, all the bulls were playing for was no longer

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valid. The story had cracked.

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And so we pivoted and shorted there at that stock.

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And we ended up making money both ways.

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Back then, we didn't have the shorting capabilities.

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If we did, that would be a prime example of a good story

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where you can completely change your view and

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be flexible. And when the facts change, move from

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a long position to a short position to capitalise on the

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other side.

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That's a very important point that Nick just mentioned.

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I had the benefit of sitting next to Nick during that period.

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It was incredibly impressive what you were able to do because

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Nick, with just one or two years of experience in the

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industry, had every single portfolio manager coming

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by daily to figure out what they should be doing

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with that stock. That was the focus of the Canadian

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market at the time.

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And what I saw was not just how well Nick manage

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the pressure of that, but how he changed his mind when the

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facts changed. And you're going to hear a lot about that

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in Global Opportunities Long Short, how we are able to change

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our mind when facts change.

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There's a lot going on out there right now that's shifting,

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and our job is to take advantage of that and find the

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opportunities.

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So you have been analysts at Fidelity for a long

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time, covering pretty much probably a complementary number

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of sectors and industries.

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They work mostly Canadian, though.

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Why a global fund?

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Yeah, that's a great question.

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For us, the mandate flex, when we thought about the ideal

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mandate, that flexibility to be able to take

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a thematic and go across the world to find the best risk

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reward opportunity was really appealing.

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Now, as you mentioned, our analyst experience was mostly in

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Canada, but we've done it across a variety of industry.

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In my opinion, some of the most complex, technically complex

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industries. So we've learned the nuts and bolts of the

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specifics of a commodity and a

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banking industry and technology and health care.

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And for the specifics, we can sit on the shoulder of the

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giant that is the Fidelity Research Engine.

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Yes. They can fill in the specific.

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Even a small company that I may find in

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Europe, we most likely have an analyst covering it.

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If he's not covering that one, probably a competitor.

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And he can easily help us set up a call.

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So we're plugged into what's happening around the world.

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But we really found the appeal of being able

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to have a mandate that allows us to bring best ideas

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across market cap.

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Geographies, sectors, both on the long and short side.

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Would you would you say there's a style to this fund

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particularly either value growth something in

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between?

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I'll talk about value and growth because it is important how

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we bring those into the portfolio.

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I just want to add on to a little bit of what Nick said and

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how we think about our mandate globally.

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We often ask ourselves the question, where is the best

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exposure for a certain thematic,

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certain world event that's playing out?

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So for instance, when AI started to become a

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very investable theme, we look to the supply

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chain in Asia.

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Because that's where a lot of innovation was happening.

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We found some of our biggest winners in Asia by applying

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our learnings here in North America.

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So you asked about long and short, you asked

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growth and value.

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So historically, Nick has tended to come with more of

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a quality growth approach to investing.

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He talked about that early example of the Auto Collision

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Repair Centre.

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I have tended to with more of a value centred approach.

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Okay. We found that...

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When an investment can tick both boxes,

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it can be very powerful.

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Nick, maybe you can tell us a little bit about one of them.

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Yeah, no, let me bring you to the ninth floor where we sit

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side by side every day and debate ideas.

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About a year ago, Max came into the office and pitched me

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a wind turbine company.

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So that's how we work. Before an idea gets in the portfolio,

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we convince the other that it's a good idea.

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And we do that for every stock.

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Now, when he came with this idea, I was like, this

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seems like a value trap to me.

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The industry has a terrible history of returns.

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And obviously, we hear the U.S.

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President, you know, is disliked of windmills.

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So how is this going to work, Max?

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Other than for the fact that the stock, yes,

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does cheap, it trades very cheap relative to its

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revenue. And then he started walking me through

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three or four, five things that were changing.

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Industry consolidating, bad contracts rolling up, pricing

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going up. And most importantly...

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Sorry, this is Canadian.

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That was a European company.

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Well, he found that in the research package that appealed to

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him. It's not something I would have been drawn to, but

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he told me on top of all these reasons, they're producing

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power and there's a power shortage.

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And then I put the picture together and I saw it, how this

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value stock could in a year or two be appealing to a growth

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investor. And we bought it, the stock has since doubled.

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It's still interesting, but it really shows

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the power of when we converge on an idea with our slightly

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different perspectives, it is a really powerful user.

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Does, I mean, the wind turbine, I

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guess where you're selling to in Europe wouldn't have come

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down because of the administration currently, would it have?

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So offshore wind has been impacted by the

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administration to some degree.

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But in Europe.

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But in Europe, it continues to go very strong.

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And as Nick was mentioning, the desire for more and

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more power for these data centres has been a thematic

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that originated in the United States, but is proliferating

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around the world.

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Would you say that that is actually a theme, something that

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originates in the United States but proliferates around the

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world? You go and look for where it takes hold in

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other countries, but it's a thematic that's been recognised

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as working already?

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That is one of our advantages as a global fund,

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is taking the learnings from one place and applying it

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to another. Some markets tend to lead.

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Often in technology, the United States tends to lead,

[00:14:03.480]

often in manufacturing, innovation can come from

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elsewhere. We looked at places like China for

[00:14:10.080]

innovation in machinery, as an example.

[00:14:13.800]

Hello, investors. We'll be back to the show in just a moment.

[00:14:16.840]

I wanted to share that here at Fidelity, we value your opinion.

[00:14:20.200]

Please take a few minutes to help us shape the future of Fidelity Connects

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podcasts. Complete our listener survey by visiting fidelity.ca/survey,

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Periodic draws ending by March 30th, 2026.

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And don't forget to listen to Fidelity Connects, the Upside, and French

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DialoguesFidelity podcasts available on Apple, Spotify, YouTube, or wherever

[00:14:41.040]

else you get your podcasts. Now back to today's show.

[00:14:45.920]

Would you say that the next, let's

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talk a little bit about sort of cyclical stocks, how you take

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a look at some of the macro themes and just thematics

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generally. If AI is the main thematic, are you looking

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more at sort of the energy side of it at this stage?

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Is there kind of a commodity cyclical piece to

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the fund at this point?

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It's a thematic that will keep bringing us to different parts

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of the market.

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The picks and shovels, whether it's the data centre, the

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chips, and obviously the power has been very prevalent

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up to now. And it continues to be as the large

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model companies build larger and larger

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data centres and models that require more of that energy.

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So that keeps bringing us, it's brought us all around the

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world, you know, in Europe, in Korea, in Taiwan.

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In the United States, sometimes even short, you know, in the

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middle of all this hype for AI, we found some companies

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that get caught up in the hype and the fundamentals don't

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support it.

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Mm.

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Maybe Max, do you recall an example

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of a short we've had in the space that we've been able to

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benefit from?

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Yeah, Nick and I were talking about our past

[00:15:52.280]

performance and one of the funny things that came up was that

[00:15:55.000]

our best performer, as it related to artificial intelligence,

[00:15:58.240]

was a European industrial company.

[00:16:01.320]

And conversely, our best

[00:16:04.520]

short performance was in a company that built servers

[00:16:08.040]

for the purpose of AI and-

[00:16:11.320]

Didn't you say it was in Silicon Valley?

[00:16:12.960]

They were based in Silicon valley.

[00:16:14.960]

Yeah, so- One day, Nick and I were reviewing the

[00:16:18.160]

supply chain. We were going through what was changing, where

[00:16:20.880]

these chips were being allocated.

[00:16:22.800]

And what we discovered was a very interesting insight hidden

[00:16:25.760]

in research coming out of our Taiwan office,

[00:16:29.440]

where there was something called a

[00:16:32.520]

golden sample, a special chip that

[00:16:35.680]

would allow a company to have a head start on producing

[00:16:39.680]

NVIDIA's latest clusters

[00:16:42.800]

of GPUs.

[00:16:44.120]

And the beneficiary of that

[00:16:47.520]

market structure had this head start and

[00:16:50.560]

was producing record results.

[00:16:52.080]

They were growing very quickly with high margins and stocks

[00:16:54.520]

going straight up.

[00:16:56.560]

And by finding that insight that was hidden, we were

[00:16:59.800]

able to take the other side.

[00:17:01.160]

We were able to embrace the surprise of when

[00:17:04.480]

that period of exclusivity came to an end.

[00:17:07.040]

So it's kind of like NVIDIA with...

[00:17:09.160]

Nvidia was going to need this particular type of server,

[00:17:12.680]

and the market hadn't recognised that yet.

[00:17:14.640]

So NVIDIA allocates to a server builder

[00:17:18.040]

every generation.

[00:17:19.720]

Of chips.

[00:17:20.040]

Of chip. The server builder will take risk by

[00:17:23.720]

agreeing to build with that chip before it has

[00:17:26.800]

been commercialised.

[00:17:28.160]

They're compensated for that risk with a

[00:17:31.280]

period of exclusivity.

[00:17:32.640]

That's what we were able to get from our research and

[00:17:35.680]

that's what were able to ultimately employ.

[00:17:37.720]

We took this piece of insight that we learned in Asia and

[00:17:41.040]

applied it in the U.S.

[00:17:43.240]

That's absolutely fascinating.

[00:17:44.800]

So what is it you want Canadians to know about having

[00:17:48.080]

access to international markets?

[00:17:50.040]

Last year was a surprise.

[00:17:52.160]

It was a massive success.

[00:17:53.640]

It was the story of the year, certainly in terms of

[00:17:56.320]

investment returns, that Europe took off and

[00:17:59.760]

developed markets took off, EM took off.

[00:18:03.600]

This is great for Canadians still.

[00:18:05.920]

Is this an ongoing sort of global bullish market, do

[00:18:09.120]

you think?

[00:18:09.800]

I think it has some leg, and this is where really

[00:18:13.000]

a flexible global mandate can shine.

[00:18:15.480]

And a lot of global funds are still heavily invested in the

[00:18:18.080]

U.S. We're not just jumping on this for the last, when

[00:18:21.240]

we've been managing our pallets for the last three years,

[00:18:23.800]

we've running a significant overweight to those

[00:18:27.160]

international markets.

[00:18:28.560]

And we still do. There's still a lot companies for similar

[00:18:31.760]

comparables in terms of their quality and

[00:18:34.840]

growth that are cheaper in the international market.

[00:18:37.560]

And I think the appeal right

[00:18:40.760]

now for a global long-shoring mandate is very high.

[00:18:44.840]

Despite that some of these trends have started, the U.S.

[00:18:48.000]

Market remains historically expensive and concentrated.

[00:18:51.680]

You know, we have policy of deglobalization, which has

[00:18:54.760]

pressured the U S dollar and brought flows in

[00:18:57.960]

other parts of the world. And when you look at that

[00:19:00.720]

leadership in the U.S., those...

[00:19:02.920]

Mega caps that have been cash cows for so long their

[00:19:06.000]

business models are pivoting.

[00:19:07.320]

They're suddenly becoming capital intensive So, you

[00:19:10.440]

know a lot of things changing in the world and

[00:19:14.000]

you know weak us dollar tends to create bull markets and all

[00:19:17.080]

sorts of areas that Investors had the luxury to

[00:19:20.280]

ignore in the past 10 15 years, right?

[00:19:22.840]

Commodities international stocks small caps and we're finding

[00:19:25.920]

so many opportunities in all those those areas at

[00:19:29.120]

the same time as you know there's pockets of fraud in the

[00:19:32.240]

U.S. That gives us some interesting opportunities

[00:19:35.400]

on the short side.

[00:19:36.120]

There is a much-discussed broadening of the trade of the

[00:19:39.120]

tape, essentially.

[00:19:41.120]

So small and mid-cap are interesting.

[00:19:44.280]

Are they... I guess just tell us a little bit more about

[00:19:47.360]

that. Do you have the ability to go, in terms of cap size,

[00:19:50.400]

anywhere?

[00:19:51.720]

We do, yes.

[00:19:53.280]

Okay, so we have an MSCI world benchmark,

[00:19:57.240]

which means that we have to look at everything around the

[00:20:00.360]

world. The largest constituents of that benchmark are

[00:20:03.480]

large cap companies.

[00:20:04.440]

It's about 6,000 companies there, is that the universe?

[00:20:06.800]

In the MSU.

[00:20:07.160]

In the MSCI world, around 2000, we have in

[00:20:10.320]

our database, we're tracking about 6,000 companies.

[00:20:13.520]

So we are spread out and the benefit

[00:20:16.640]

of being spread out is that we can identify companies

[00:20:19.920]

that are not just good, they're great.

[00:20:23.320]

Nick is especially, he excels in

[00:20:26.360]

this area. He can pick out companies that are going to

[00:20:29.240]

differentiate. When we started this mandate, we

[00:20:32.480]

looked historically at the returns in the stock market.

[00:20:35.120]

We found that they are concentrated.

[00:20:36.960]

It's only a handful of names that drive all of the

[00:20:39.760]

outperformance versus the market over time.

[00:20:42.520]

That helps us on the short side.

[00:20:45.280]

But what we really need to do is identify the big winners on

[00:20:48.480]

the long side. Fortunately, I have a partner here who has

[00:20:51.840]

demonstrated an incredible track record of doing that.

[00:20:54.480]

As Nick said, we are seeing...

[00:20:56.920]

New pockets in the market open up, new bull

[00:20:59.960]

markets. It's driven not just by AI, but

[00:21:03.040]

we might get to talk about geopolitics.

[00:21:05.120]

That's offered us some really interesting opportunities to

[00:21:08.120]

pick winners in industries that were previously losers and

[00:21:11.600]

now look a lot better.

[00:21:13.080]

Is it linked to sort of the rebuilding of the world?

[00:21:16.120]

Europe has a big rebuild burgeoning

[00:21:20.000]

industry. It looks like, yeah, tell us a little bit about the

[00:21:22.480]

geopolitical overhang, but where the opportunities are

[00:21:25.120]

within.

[00:21:25.720]

Right. It's easy to get caught up in the

[00:21:29.000]

overhang or the pessimism, but it's creating new

[00:21:31.320]

opportunities, industries that for a long time were

[00:21:34.440]

perceived as long term losers or suddenly becoming

[00:21:37.800]

winners. It can be both the supply and the demand dynamic.

[00:21:41.080]

Right. Let's talk about European steel,

[00:21:44.200]

for example, as was a very difficult industry for a long

[00:21:47.400]

time, a high cost area to produce steel and

[00:21:50.800]

not a tonne of local demand. But as you mentioned, And

[00:21:52.760]

there's now a push to rebuild the domestic manufacturing

[00:21:56.320]

capabilities, the defence sectors.

[00:21:57.960]

Those are still intensive. Everything. Like, rebuild

[00:21:59.280]

everything. Yeah. And they've had, like, a rate-cutting

[00:22:01.800]

cycle. So we're seeing some cyclical impulse in different

[00:22:04.240]

parts of the market. At the same time as they are taking

[00:22:07.520]

a page from Trump's playbook in terms of protecting some

[00:22:11.320]

strategically important industries, in which steel is one of

[00:22:14.320]

them and they've imposed greater trade barriers,

[00:22:17.360]

which allows some of the producers to capitalise not only

[00:22:20.480]

in volume, but also in price.

[00:22:22.000]

The narrative completely flipped there.

[00:22:24.640]

So much has happened, you know, especially post-liberation

[00:22:27.440]

day, which was really a turning point moment for the world,

[00:22:30.640]

you know in terms of where we're going from, shifting

[00:22:33.720]

35 years basically of globalisation into a new world,

[00:22:36.800]

right? Like what are some of the opportunities we've seen

[00:22:39.880]

maybe around that time frame?

[00:22:41.280]

You have to move fast. It was only a week of really chefs.

[00:22:43.520]

Yeah. Liberation Day.

[00:22:44.120]

Liberation Day, it very much played into our strengths.

[00:22:47.240]

And when we started this strategy, we talked about

[00:22:50.280]

the benefits of having this, having two

[00:22:53.520]

portfolio managers. We talked about benefits and the

[00:22:55.840]

drawbacks. And we said, we wanted to have the agility of

[00:22:59.280]

a single manager, the ability to move quickly.

[00:23:01.960]

We didn't want to get caught up debating endlessly, but we

[00:23:05.160]

wanted it to look thoroughly through ideas and check blind

[00:23:07.920]

spots. That's what was on display during

[00:23:10.960]

Liberation Day. So when we saw the reaction

[00:23:14.080]

to Liberation Day, we saw a restriction of

[00:23:17.680]

critical minerals exports from China.

[00:23:20.000]

We were able to draw on previous experience

[00:23:23.080]

in that industry where we had seen all of the players

[00:23:26.280]

actually fail because the Chinese had a lower

[00:23:29.360]

cost structure. And we saw who was coming into the industry.

[00:23:32.840]

We very quickly communicated with our London and Australia

[00:23:36.120]

offices. We identified the best player in

[00:23:39.560]

that industry who had the best chance of success

[00:23:42.600]

in a new world order.

[00:23:44.680]

We were able to take a position quickly, that stock soon

[00:23:47.240]

doubled. That's a perfect example of how we embrace

[00:23:50.560]

change. We did it in the semiconductor industry as

[00:23:53.680]

well by looking at the flip side of the tariffs, which

[00:23:56.680]

tariffs would not stick because if you recall that board,

[00:24:00.600]

some of the numbers on there were very high relative to what

[00:24:03.280]

the numbers are today.

[00:24:03.960]

There were some 79s and 100s.

[00:24:07.120]

That's right. Yeah, wasn't there some island with penguins on

[00:24:09.720]

it only or something with very high levels?

[00:24:11.920]

We tried to look at the substance over the forum.

[00:24:14.600]

We saw that the trade order was changing.

[00:24:17.760]

It wasn't necessarily specifically those numbers, but

[00:24:20.920]

the general direction became clear to us.

[00:24:22.800]

So you kind of went hunting in there.

[00:24:24.520]

There's a question coming in here asking Max

[00:24:28.080]

and Nick, could you explain how this fund differs from the

[00:24:30.840]

other long short alt funds offered by

[00:24:34.000]

Fidelity? So I mean, there is another global long

[00:24:37.160]

short. It's very much value oriented.

[00:24:40.640]

Tell us a little bit about, that's why I was asking about

[00:24:42.200]

style. How is this different to the other alts?

[00:24:45.480]

Yeah, you mentioned it, right?

[00:24:47.640]

This is less of a style-oriented point.

[00:24:50.440]

It's more of a global best ideas, I

[00:24:53.520]

would say. Also, our short

[00:24:56.560]

book is managed in a way where we want just the diversified

[00:25:00.680]

sources of returns, right?

[00:25:02.120]

Very company-specific narratives.

[00:25:04.400]

Again, less of a factor bet and more of a what's

[00:25:07.680]

happening with each individual company.

[00:25:09.640]

And in that perspective, we manage the short book with very

[00:25:12.880]

tight risk management.

[00:25:14.400]

We don't want one stock to

[00:25:17.640]

start dominating the performance there.

[00:25:19.520]

We rather want to take a basket approach.

[00:25:22.240]

And so- On the short side, specifically,

[00:25:26.040]

because the short side, it's beautiful, the shorts.

[00:25:28.840]

As Max mentioned, there's a long tail of losers to play

[00:25:32.040]

for. We have the research analysts who identify both the

[00:25:35.120]

winners and the losers in their space.

[00:25:36.960]

Huge opportunity to add returns and lower volatility.

[00:25:40.560]

The flip side is that a short, you know, you can

[00:25:43.720]

lose in theory multiple times your initial capital.

[00:25:46.680]

But we offset that to, again, strong risk management.

[00:25:49.880]

If a position starts to move against us, we'll review the

[00:25:53.080]

thesis and even if we still think the thesis is intact,

[00:25:56.480]

we'll manage the position size back to the original position

[00:25:59.240]

size to avoid a small problem becoming a big problem for this

[00:26:02.360]

book.

[00:26:02.400]

Part of that risk management is also Nick and I sitting next

[00:26:05.520]

to each other every day.

[00:26:07.120]

So if there's a position that I've put in the portfolio and

[00:26:10.280]

it's going against us, there is nowhere for me to hide

[00:26:13.480]

because Nick is right there. And it means that I don't just

[00:26:16.440]

need to convince Nick that an idea is good to be in the

[00:26:19.320]

Portfolio. I need to convinced him that it remains good.

[00:26:22.600]

That forces us to review the thesis.

[00:26:25.240]

It increases the level of discipline.

[00:26:27.360]

It's part of the benefit of having both of us on the

[00:26:29.480]

strategy.

[00:26:29.720]

That's amazing. Would you say a theme of the

[00:26:32.920]

fund at the moment is the reversal of globalisation?

[00:26:36.200]

Like is that something that as

[00:26:39.520]

companies have become more looking for more local clients

[00:26:42.920]

that may just be inside their very large country, but is that

[00:26:46.280]

a big piece of finding global stocks that

[00:26:49.320]

are reversing and not selling to the world as much?

[00:26:53.120]

It's an important piece. But that to both of you.

[00:26:54.720]

Yeah, I mean, Max, I'm sure has a lot of thoughts on

[00:26:57.760]

it. It's different from just the AI story.

[00:27:00.960]

It just shows you follow many trends in the market.

[00:27:04.600]

And we always look where there's a lot of change, because

[00:27:06.960]

that's where there is the most potential for

[00:27:10.320]

a narrative the market got wrong.

[00:27:11.880]

And that's why we really excel.

[00:27:14.120]

So, you know, we gave a couple of examples where that line of

[00:27:17.040]

thinking brought us from an Australian mine to the

[00:27:20.480]

European steel sector.

[00:27:21.920]

And, you know, potentially it brings us

[00:27:25.040]

in the United States where there's industrial companies that

[00:27:28.160]

can benefit from reshoring and it'll

[00:27:31.480]

keep bringing us in different parts of the world.

[00:27:33.960]

And on the short side, too, right?

[00:27:35.400]

Think of a company selling goods, maybe an American company

[00:27:38.640]

selling coffee in China.

[00:27:40.920]

Those have been very, very good lines of business

[00:27:44.080]

for a long time, maybe more difficult going forward.

[00:27:46.280]

So, on the short side, it's also created

[00:27:49.600]

a lot of opportunities for us to capitalise.

[00:27:52.320]

Yeah, would you say about that?

[00:27:53.560]

I think we're careful not to get too focused on any one

[00:27:56.080]

thematic, as Nick was saying. We observe them, we

[00:27:59.160]

anticipate and we react.

[00:28:01.120]

So I almost want to describe de-globalisation

[00:28:04.360]

as re-glocalization.

[00:28:05.840]

As you know, our Prime Minister went and

[00:28:09.040]

in Switzerland mentioned his desire to create new trade

[00:28:12.160]

agreements with other countries.

[00:28:13.920]

So in some instances we see de-globilization.

[00:28:17.280]

In some instances, we see new ties forming.

[00:28:20.600]

We are opportunistic, we change when the facts change.

[00:28:24.360]

We're very connected with our research around the world and

[00:28:27.600]

we're supported by this incredible team.

[00:28:30.160]

What countries are you in that you can share with us?

[00:28:32.400]

You don't need to do a long laundry list, but perhaps even

[00:28:35.600]

countries that we wouldn't know.

[00:28:38.600]

There's still a lot of, you know, it's

[00:28:41.800]

various countries in Europe, UK,

[00:28:45.840]

Korea, Taiwan, different parts of Asia,

[00:28:49.320]

and you know of course Canada too, sitting in

[00:28:53.360]

Toronto we have a very good flow of ideas,

[00:28:56.920]

but I think it's just broad and it will keep shifting as

[00:29:00.120]

the opportunities shift.

[00:29:01.720]

Can you go to EM?

[00:29:03.080]

No.

[00:29:03.360]

We can add a small portion in EM, yeah, so opportunistically

[00:29:06.760]

we found good, sometimes the

[00:29:10.120]

EM is the best place to be in a particular thematic, or

[00:29:13.240]

we find a great idea in EM.

[00:29:16.240]

It's a smaller portion since we're an MSCI world, but we can

[00:29:19.360]

have a couple percent there and we've certainly taken

[00:29:21.560]

advantage of it.

[00:29:21.960]

Typically has to be something special for us to go to

[00:29:25.040]

EM. We're not gonna go there for a national grocery

[00:29:28.360]

store, most likely, but we may go there, for instance, if we

[00:29:31.320]

find the best battery maker in the world.

[00:29:34.200]

When all the battery companies are losing money, we

[00:29:37.480]

will go to an EM.

[00:29:39.040]

Nick may wanna speak a little bit more about that one.

[00:29:41.600]

Well, that was fine. I mean, we're connected and we have

[00:29:44.720]

10 people from our teams.

[00:29:46.760]

You know, we have Alice sitting in Hong Kong, but they'll go

[00:29:49.440]

to Taiwan. They'll go in China as well.

[00:29:52.400]

And, you know, we can own Hong Kong listed stocks.

[00:29:55.360]

And sometimes if that is the low cost producer, when

[00:29:58.880]

you have an industry where everyone's losing money, it

[00:30:01.720]

usually is a good time to find that low cost, uh,

[00:30:05.080]

producer, the leader.

[00:30:06.640]

It was fascinating. The insights our teams got, documenting

[00:30:09.920]

the culture there and the bets they've been making always on

[00:30:12.840]

the next technology and how they got to that position.

[00:30:15.360]

Because that's important in terms of how we think, will they

[00:30:18.040]

remain in that position in two years, in five years.

[00:30:20.760]

So we had some insights there.

[00:30:23.160]

Industry was in the downturn because of EVs as we know.

[00:30:26.080]

But that's part of when they said, you know, something's

[00:30:29.280]

changing because now these batteries, they're not just EV

[00:30:32.080]

plays. We're putting them on the grid.

[00:30:34.360]

We're cutting them with solar panels.

[00:30:35.800]

The cost is declining.

[00:30:37.880]

It's solving a lot of issues on the energy front and

[00:30:41.240]

so even from that insight It wasn't just that company that

[00:30:44.160]

was interesting, but that had repercussions on many

[00:30:47.480]

other ideas that we've been looking at that could be

[00:30:50.520]

in the US, for example.

[00:30:51.720]

It's so interesting. So can you tell us

[00:30:54.840]

how much is tilted towards the US at this stage?

[00:30:58.480]

We'll have around a third of our portfolio, maybe

[00:31:01.600]

a little bit more exposed to the US in terms

[00:31:04.680]

of the domicile.

[00:31:07.280]

I want to emphasise that we think substance over form.

[00:31:10.000]

So there are instances where, if you've looked at our

[00:31:12.440]

holdings, you would say, that company is located in

[00:31:15.680]

XYZ country.

[00:31:17.520]

If most of their sales are in the US, we think of them as a

[00:31:20.600]

US company.

[00:31:21.760]

So I'm going to ask you to just quickly wrap up of why the

[00:31:24.920]

Canadian investor joining you here today should

[00:31:28.360]

take a look at this fund and perhaps balance out their

[00:31:30.800]

Canadian exposure or maybe different types of U.S.

[00:31:33.600]

Exposure. Do you want to take a crack at that?

[00:31:35.480]

Yeah, I mean, this is a really exciting time for us to

[00:31:38.400]

manage, you know, a global strategy doing in this

[00:31:41.560]

partnership with the research and then

[00:31:45.120]

the philtre that we bring the two of us.

[00:31:47.360]

I think it's really unique.

[00:31:49.000]

And right now, our broad mandate is we're

[00:31:52.920]

seeing a really good opportunity set for that because the

[00:31:55.480]

markets are broadening. You know, we didn't talk about the AI

[00:31:58.640]

also, a lot of losers emerging.

[00:32:00.960]

So to be able to play on both sides of the market in an

[00:32:03.760]

environment that's shifting from geopolitics, from

[00:32:06.280]

technology, and in a broadening

[00:32:09.360]

market is exactly, I think, the perfect

[00:32:12.440]

environment for a global long-short opportunistic

[00:32:16.040]

strategy like this one.

[00:32:17.720]

And I think yeah, investors in general may have

[00:32:20.920]

a lot of US exposure, may start to just look

[00:32:24.040]

at, okay, where can I diversify in this new

[00:32:27.280]

world? Maybe the things that got me here in the last 10, 15

[00:32:30.280]

years look a little bit different And I think that's

[00:32:33.440]

a great place to start the conversation on this.

[00:32:35.160]

Actually your mandate to do both sides of that, the winners

[00:32:38.000]

and the losers.

[00:32:39.600]

Anything to add to that Max? He answered that beautifully,

[00:32:41.720]

but I thought I'd just ask you.

[00:32:42.840]

I think so. Nick always answers.

[00:32:44.920]

He answers many things beautifully.

[00:32:47.240]

I'm thrilled to have the opportunity to work with him.

[00:32:50.160]

I don't have anything else to add.

[00:32:51.880]

Fantastic. Max and Nick, thank you for joining us here.

[00:32:54.680]

Congratulations on the launch, and I'm sure we'll see you

[00:32:57.360]

soon to hear the updates.

[00:32:59.400]

Thank you.

[00:33:00.880]

Thanks for watching or listening to the Fidelity Connects

[00:33:04.800]

podcast. Now if you haven't done so already, please subscribe to Fidelity

[00:33:08.960]

Connects on your podcast platform of choice.

[00:33:11.720]

And if you like what you're hearing, please leave a review or a five-star

[00:33:14.600]

rating. Fidelity Mutual Funds and ETFs are available by working with

[00:33:18.560]

a financial advisor or through an online brokerage account.

[00:33:21.920]

Visit fidelity.ca/howtobuy for more information.

[00:33:25.640]

While on Fidelity.ca, you can also find more information on future live

[00:33:29.480]

webcasts. And don't forget to follow Fidelity Canada on YouTube, LinkedIn,

[00:33:33.600]

and Instagram.

[00:33:34.920]

We'll end today's show with a short disclaimer.

[00:33:37.760]

The views and opinions expressed on this podcast are those of the participants,

[00:33:41.600]

and do not necessarily reflect those of Fidelity Investments Canada ULC or

[00:33:45.520]

its affiliates. This podcast is for informational purposes only, and should not

[00:33:49.520]

be construed as investment, tax, or legal advice.

[00:33:52.080]

It is not an offer to sell or buy.

[00:33:54.400]

Or an endorsement, recommendation, or sponsorship of any entity or securities

[00:33:58.720]

cited. Read a fund's prospectus before investing, funds are not guaranteed.

[00:34:03.520]

Their values change frequently, and past performance may not be repeated.

[00:34:07.080]

Fees, expenses, and commissions are all associated

[00:34:09.520]

with fund investments.

[00:34:11.680]

Thanks again. We'll see you next time.

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FidelityConnects: Introducing Fidelity Global Opportunities Long/Short Fund

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