Fidelity Growth to Gain on Pharmasset Deal

Steven Wymer’s Fidelity Growth Company Fund (FDGRX) stands to reap $478.4 million on its stake in Pharmasset Inc. (VRUS) after Gilead Sciences Inc. (GILD) agreed to buy the drug company at an 89 percent premium.

The $38.5 billion Fidelity Growth fund held 7.44 million shares of Pharmasset as of Sept. 30, a stake valued at about $540.4 million at the end of last week, according to data compiled by Bloomberg. Gilead today offered to pay $137 a share in cash for Pharmasset, which would boost the value of Fidelity’s holding to $1.02 billion.

Wymer, who has managed the Fidelity Growth fund since 1997, invests in companies that he believes have above-average growth potential. He started amassing a stake in Pharmasset in the second quarter of 2008 and over the next three years almost tripled his holding in the drug company, according to data compiled by Bloomberg. About 16 percent of the fund is invested in health-care companies, according to information posted on Fidelity’s website.

“By far, the biggest contributor to the fund’s relative performance was strong stock picking in health care, specifically in the pharmaceuticals / biotechnology and life science area,” Wymer wrote in a May 31 report to shareholders.

Princeton, New Jersey-based Pharmasset, which is developing experimental hepatitis C treatments, was the seventh-largest holding in the Fidelity Growth fund as of Sept. 30, according to data compiled by Bloomberg. The top holding in the fund is Apple Inc., whose shares have advanced 13.6 percent this year.

Beating Rivals

The fund declined 1 percent this year through Nov. 18, doing better than 79 percent of similarly managed funds. It advanced at an average annual rate of 3.6 percent over the past five years, beating 84 percent of peers.

Sophie Launay, a spokeswoman for Boston-based Fidelity, declined to comment on the stake.

Fidelity, which has also invested in Pharmasset through other mutual funds, is the biggest shareholder in the company, owning 12.7 percent of the outstanding shares in Pharmasset.

Another mutual funds which stands to gain from Pharmasset is the $7.8 billion T. Rowe Price New Horizons Fund. The fund owns about 1.64 million shares of the company, according to data compiled by Bloomberg.

To contact the reporter on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net