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Jorma Korhonen

Fidelity’s new global special situations fund manager has the toughest act in the fund business to follow in taking over from Anthony Bolton but he says he wants to get the message across to investors and advisers that the fund is all about absolute returns and he is not averse to taking substantial risk. Interview by Philip Scott

Fidelity global special situations fund manager Jorma Korhonen, protege of Anthony Bolton, fully intends to prove critics wrong. Looking ahead three years, Korhonen says: “Historically, I have been in the first quartile performer and I would be very disappointed if I cannot continue to deliver that.”

But if there is one message he wants advisers and investors to understand, it is that they should not think of the fund as a global product but as a special situations vehicle. “It is about absolute returns – finding ideas wherever they happen to be – and it is at the higher end of the risk spectrum.”

Korhonen says he is not opposed to taking substantial risk, provided, of course, that the payoff is there. “Back in 2002, I had stocks in my portfolio that I could tell you with a straight face would go up fivefold over the next three years. I did not know when it would happen but I could guarantee you it would and I had several names like that, one of which went up tenfold. When people panic, that is when you take risk, take big risks because that is when you get the big payoff. Right now, the risk tolerance of people is very high. I find it amazing. We have had a military coup in Thailand, major civil unrest in Hungary and a hedge fund has just blown up. In Thailand, the first day the market reopened, it was at -1 per cent.”

Korhonen started his new role by examining all the existing holdings in the portfolio to understand the investment case for each one. “I sat down with Anthony to chat about the holdings. As a result, I have started to shape up the portfolio. We started from the basic principle that I had a claim for 50 per cent of each of the holdings if I wanted them.”

But what if there is a difference of opinion between him and Bolton? Korhonen says he is not afraid to fight his corner against the “quiet assassin”.

He says: “We have worked together for 10 years. We have an understanding. Many times, it is a constructive discussion.”

All new investments will originate from Korhonen but, for now, Bolton has the final say if they go in. Korhonen says: “From January 1, 2007, I am taking over the portfolio 100 per cent and the expectation is that the portfolio will be 100 per cent the way I want it to be.

“I have said that the number of holdings should be between 100 and 200 but the number of stocks will not necessarily tell you about the risks you are taking. If, for example, I find my ideas are in large caps, then I concentrate down because the liquidity risk has just reduced massively. You can make a relatively well diversified portfolio with 40 names but it is unlikely I would take it to 40.”

Historically for Korhonen, taking an 18-month view, turnover has been around 70 per cent. In terms of the cash weighting, Korhonen says he has been pleasantly surprised on redemptions.

He is also happy about the way things have played out since it was announced he would be the manager of the global special situations vehicle and that the split ha gone even smoother than either he or Fidelity had anticipated.

Korhonen expected a lot of media attention but he was still surprised by the column inches dedicated to him. He thinks the coverage was relatively fair but says: “I must say, having been in this firm 10 years, the last thing I expected was to have to defend my level of experience. This is the sixth fund that I am taking over.”

Korhonen was managing three accounts during the boom and bust era at the turn of the century and he says two have outperformed the indices. One had a substantial underperformance in 2002 but during his tenure, he still finished at number two in the group.

“I have seen all market cycles, I have seen emerging market blow-ups and banking crises. You name it, I have gone through it.”

Korhonen says he is still relatively optimistic on the energy sector which he believes is still going through a correction but that he would expect that to happen periodically and that the long-term case is still there as it is a very long business cycle.

He works 12-hour days and spends a lot of time on the road – lasy yearm it was 149 days. Since the July announcement he has been to Hong Kong, Boston, New York and back to Hong Kong. When Money Marketing meets him, he is getting ready to go to Harrogate. He has a family in London and getting home is a priority.

“I make a point of getting back home before the kids go to bed and when I travel, I make a point of getting back home for the weekend.”

Korhonen is a keen reader and recent topics include hostage negotiation, the business model of google and the history of terrorism. He says he is not a fan of the Finnish winners of this year’s Eurovision song context winners Lordi but it did make him laugh. “It was the biggest joke I have ever seen. I thought it was hilarious.”

Born: Helsinki, Finland, 1966

Lives: South-west London with wife and children

Education: MBA from the IMD business school in Lausanne, Switzerland and a BBA from the Schiller International University, Germany

Career: Before joining Fidelity, spent five years with Dai-ichi Kangyo Bank in Luxemburg. He joined Fidelity in 1996 and spent the next six years as a research analyst, both in London and in Boston. As an analyst, he covered a number of sectors, including banks and financial services. He became a portfolio manager in January 2002

Likes: Learning new and cool things every day

Dislikes: Bureaucracy and structure Drives: An old A-Class Mercedes.

Favourite film: The Godfather (Part 1)

Favourite book: The Unknown Soldier.

Favourite album: Too many good ones to choose from.

Heroes: Larry Page and Sergey Brin, founders of Google career ambition: To beat the market.

Life ambition: To be able to do what I love doing every day

If I were not doing my current job, I would be.. This is my perfect job, I love it


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