Fidelity's Wymer: Oil Plunge Does Not Cloud Solar Bet

One of Fidelity Investments top stock pickers said he remains positive on solar power despite a drop in oil prices that hurt shares of First Solar Inc and dragged on his own portfolio's performance.

 

Steven Wymer, who runs the $42.3 billion Fidelity Growth Company Fund, is the biggest fund investor in First Solar, a large maker of photovoltaic panels for power systems. Still, his fund's 6.80 percent total return in the fourth quarter beat the 4.93 percent advance of the Standard & Poor's 500 Index.

 

"While solar fundamentals are largely unrelated to oil prices, the drop in oil prices weighed on investors' sentiment toward energy sources in general, including alternatives such as electricity-generating solar operators and their suppliers," Wymer wrote in a quarterly update for investors.

 

"We're still positive on the potential for solar as a secular theme, and the fund remained invested in First Solar at quarter-end," Wymer added.

 

His comments echo a common complaint among solar power executives who say their companies have been unfairly tarred by the decline in oil prices. They say oil-burning power plants account for a very small share of U.S. electrical generation and thus do not pose much direct competition.

 

Shares in First Solar were trading around $41 on Wednesday, after rising above $70 in September. Others like SunPower Corp and SolarCity Corp also fell during that period.

 

While First Solar made up less than 1 percent of Wymer's fund, its decline made the company the biggest detractor in Growth Company Fund's quarterly performance. Top contributors included drugmakers Isis Pharmaceuticals Inc and Alkermes Plc, according to Wymer's letter.

 

Wymer wrote that solar and other alternative energy sources such as wind and geothermal technologies look promising as they become cheaper. And many other countries with higher electrical rates than the U.S. may adopt the technologies faster.

 

"This industry can be volatile, but we think it could stabilize somewhat as consumers become more aware of solar's advantages versus traditional energy sources," he wrote.