by Charlie Parker on Jul 15, 2010 at 10:48
Legendary Fidelity investor Anthony Bolton believes BP now represents a once in a lifetime opportunity for investors to buy in.
Bolton, who now runs the Fidelity China Special Situations trust, said that he has searched hard for a way to buy into BP in his China trust but has conceded it is not a China theme.
He said: ‘You have to take this as a top down view because I am not as close to BP as I used to be. But I have thought long and hard to see if there is anyway I could include BP in the fund but I really can’t find a way to make it into a China play. I think investors are being given a classic once in a lifetime opportunity to buy BP.
‘Most of the time it is the case that when something really negative happens investors worry about if and the reality is not as bad as the worrying. Okay they have to pay a lot of money out but my view is BP will survive and will prosper. This will just be considered a very poor chapter in its history.’
His backing for the stock comes as it is knocked in Washington by the decision of a Congress committee to effectively bar it from oil exploration in the United States for years to come.
Nonetheless, the company still trades at a deep discount to the perceived embedded value of its oil resources. The company is trading at 399.5p, falling 0.36% today.
More broadly Bolton does not believe the world is facing a double-dip recession arguing that investors are still caught in a negative mentality acquired during the credit crunch. In fact he argues the second phase of the bull run will start later this year.
He said: ‘What we have had is the deepest recession we have seen and it was a global recession. Then we had the opposite of that; a sharp economic recovery. My view is this is camouflaging the underlying situation and as you get into this year it will become apparent that the world is getting back to a position of low growth. I don’t see a double-dip recession in Western economies.
‘We will continue to have low interest rates in the West and at some point people will start to look at risk assets because there is too much liquidity on deposit and that is not attractive. It will come back into stocks and shares.
‘From the beginning I thought this would be a multi-year bull market. But we needed a significant correction and we are now living through that.
‘Investors get very influenced by recent experience and because of this terrible financial crisis and sharp downturn investors worry we will get these things often. But my view is this was a once in a lifetime event.’
Bolton surprised investors last year when after handing over his long-term fund Fidelity Special Situations he chose to come back with an investment trust. However, investors received it warmly and the trust remains at a 4.6% premium despite the recent sell-off in equities.
He has positioned the portfolio to benefit from developing domestic demand rather than export-led growth.