FidelityConnects Sep 18, 2026 27m 13m saved
With Darren Lekkerkerker, Portfolio Manager at Fidelity
Darren Lekkerkerker will not buy a stock unless he can underwrite it to better than 15% a year, which is the rate that doubles money in five years.
The usual answer on risk control is position sizing and stop-losses. His is a 40-to-50 stock portfolio spread across sectors, no single theme, and selling the moment the thesis stops being true.
"I find, by the way, over time that the most simple investment theses tend to be the best ones and tend to work the best, generate the best returns over time."
Lekkerkerker has run Fidelity's North American Equity Fund for 11 years, took over the firm's American Equity Fund on 5 January this year, has managed the equity portion of Canadian Balanced since January 2009, and co-manages Global Natural Resources with Joe Overdevest. He was speaking at Fidelity's VISION2026 conference in Vancouver, two days after a technology conference in San Francisco.
The full interview is covered here so you can skip it. 27 minutes of audio, 14 minutes of reading.
Here are the 13 calls that matter.
Key Takeaways
Positions are underwritten to beat 15% a year, which doubles capital over five years
Risk control is a 40 to 50 stock portfolio across sectors rather than one theme
Canadian equities are rising through a trade war because three cycles run at once: AI capital spending, resources and government-backed projects
The Canadian bank regulator cut capital requirements, which raises returns on equity and therefore payouts
He took profits in AI winners and bought the losers: software, information services, real estate and insurance brokers, clinical-trial services
Copper is not a bubble in his reading: the price rose while production did not, and top-10 mines are running below nameplate
Gold is the dollar debasement trade, rising even as US rates rise
Crude above $100 with oil stocks flat is the signal that worries him, and he owns metals instead
Rising Treasury yields are about growth and borrowing, not the start of a hiking cycle
1. Risk Is in the Process
Asked how he combines finding winners with controlling risk, Lekkerkerker put both in the same place: the kind of company he buys and how many he owns.
The portfolio itself is the risk control
I think it's that and running a diversified portfolio with 40 to 50 companies across a wide variety of sectors and not just investing on one particular investment theme but having balance in the portfolio.
Darren Lekkerkerker
The host noted the Lipper Awards on the ninth floor where he sits, a number of them his.
2. Why He Sells Quickly
On how fast he acts when a thesis breaks, the answer was immediately, and the reason was competition.
Simple theses are the ones that work
I find, by the way, over time that the most simple investment theses tend to be the best ones and tend to work the best, generate the best returns over time.
Darren Lekkerkerker
A position is bought on one or two key points. It gets sold when the thesis is no longer valid, when it has worked and the money has been made, or when a better idea turns up. The urgency comes from the number of other people who will reach the same conclusion.
3. The Owner's Three Tests
The ownership mindset the host asked about turned out to be three requirements and an order of priority between them.
He buys businesses, not stocks
I think about it not as owning stocks but being a minority owner in a business.
Darren Lekkerkerker
What he looks for is a great business, a management team focused on increasing intrinsic value over time, and a reasonable price.
Which of the three he will bend on
I care more about business quality than the valuation but the starting valuation you buy at is important over time.
Darren Lekkerkerker
4. Underwriting to 15%
Lekkerkerker took over the Fidelity American Equity Fund on 5 January, a 100% US mandate with the ability to go 10% global. It looks much like the US sleeve of North American Equity, which is 70% US and 30% Canadian and which he has run for 11 years.
The return he requires
I'm trying to underwrite to find companies that can do better than 15% a year. I think that way over five years you can double your capital.
Darren Lekkerkerker
And the standard he holds himself to
I think if you're a good portfolio manager you should be able to double capital over five years, that's the goal.
Darren Lekkerkerker
Asked whether the new fund is positioned the way he wants, he said yes, and then explained how long it took.
How fast the new mandate was built
It's been like eight months so, I think I got a position within two days.
Darren Lekkerkerker
5. Canada in a Trade War
The trade dispute with the United States has not done what he would have expected to Canadian assets.
The market went the other way
I wouldn't think they'd be ripping up and to the right. I think that's something really interesting to talk about.
Darren Lekkerkerker
The S&P/TSX, the Canadian dollar, the bank stocks and the industrials have all risen. His explanation is that several investment cycles are running through the same economy at once.
Two cycles at the same time
Number one, there's the AI capex cycle. Number two, there is a resource cycle, right?
Darren Lekkerkerker
Energy, copper, gold and aluminum prices are all higher, and the spending that follows benefits industrials, materials, energy companies and, indirectly, the banks financing it. The third leg is policy.
What the nation-building projects amount to
I think that just means that the current government is much more focused on driving economic growth domestically in Canada than the previous one.
Darren Lekkerkerker
Permits are being issued for energy infrastructure including pipelines and liquefied natural gas, Arctic development and defense. He added that there is speculation about tax incentives for Canadian companies to invest in production, which has not happened yet and would extend the trend.
6. Bullish on Refining
Asked whether Canada will refine more of what it currently ships south, Lekkerkerker said perhaps over time and that it is not what he is working on. He then went back to the subject unprompted.
The position he wanted on the record
But I would say on refining, though, I am bullish on refining.
Darren Lekkerkerker
Why the margin is where it is
The world has seen a shortage of refining capacity and, as a result, you have very high and extended refining margins.
Darren Lekkerkerker
He attributed the shortage to the conflicts involving Iran and Russia, and said refining capacity takes so long to build that the companies that already have it keep the benefit. Those shares have performed well.
7. The Canadian Banks' Q3
The third quarter was strong, and the host put the suggestion that the earnings beat was lower quality than it looked. Lekkerkerker disagreed, and cited a meeting his colleagues held the previous day in Toronto with every Canadian bank chief executive.
The fundamentals are doing the work
I think the fundamentals have been very, very strong for Canadian banks and that's why they've kind of ripped this year and last year.
Darren Lekkerkerker
Earnings growth and revenue growth are both strong and credit is fine, in his account, and the relationship with the regulator is better than it has been for a long time, to the point of reduced capital requirements.
What lower capital requirements do for a shareholder
You have higher ROEs you get either higher organic growth or you get higher cash return to us as shareholders, which we like.
Darren Lekkerkerker
8. Buying the AI Losers
Two days of meetings in San Francisco with semiconductor, hardware, software, internet and media companies left him bullish, with a caveat about how much of the move has already happened.
Demand keeps moving up the stack
I think demand is very, very strong and accelerating as it went from sort of training to inference to agentic.
Darren Lekkerkerker
Supply is behind in compute and in data centers, and the next stage people are discussing is physical artificial intelligence.
What he did after the first-half run
I took a little bit of an opportunity to take some profits there but I'm still bullish.
Darren Lekkerkerker
He holds semiconductors and the hyperscalers, and balances within technology rather than across one part of it. The more unusual part of the trade was on the other side.
The companies the AI trade sold off
Some of the companies that got crushed were within commercial real estate brokerage, insurance brokerage, also some areas of healthcare who are managing clinical trials.
Darren Lekkerkerker
Software, information services and other knowledge-worker businesses were the broader category. He judged several of them good companies on sale, added to them, and some have recovered. Asked about the headlines on people leaving artificial intelligence companies over safety controls, he declined the question as beyond him.
9. Consumer Is Not the Trade
A viewer asked how to tell a valuation opportunity in consumer stocks from real deterioration.
His answer on the consumer
I'm not bullish on the consumer broadly.
Darren Lekkerkerker
There are idiosyncratic opportunities in consumer staples, and some in discretionary, but he was clear he is not pounding the table.
What is working against demand
Consumer sentiment is low and I think with rising oil prices and rates that's not incrementally getting better in the near term for demand.
Darren Lekkerkerker
Asked whether that ties to the argument about a two-track economy, he agreed and gave a number he had seen.
The number behind the split
I think I saw a stat like top 10% of income do 50% of consumer buying.
Darren Lekkerkerker
10. Healthcare and Housing
Healthcare is owned partly because it diversifies the technology exposure, and he was specific about which part of it he will not touch.
He will not underwrite clinical trials
I find biotech has done extremely well year-to-date. I don't own biotech, I find it's difficult to invest in and try to get an edge on clinical trials.
Darren Lekkerkerker
Instead he owns the suppliers to biotech: life sciences companies and pharma services businesses, some of which sold off during the first-half artificial intelligence run and which he added to. The other part of the sector he named was housing.
Where the rent increases are
There's definitely a big lack, especially at the luxury element of senior housing, and you're seeing very strong increases in rent and net operating income.
Darren Lekkerkerker
Healthcare services delivered at home for seniors is the related area he looks at. Asked to quantify how much of the portfolio is connected to artificial intelligence, directly or at second and third remove, he said he could not do it off the top of his head and repeated that the book is balanced.
11. Rails, Trucks and Aerospace
Transportation was a call he made at the start of the year, on a cycle turning rather than on a valuation.
The reason he came in bullish
I came into the year bullish on the transportation sector.
Darren Lekkerkerker
Three years of freight recession preceded it.
The indicator that turned
We finally had seen the ISM manufacturing index inflect positive indicating expansion.
Darren Lekkerkerker
Rails and trucking both look attractive to him, with the rails treated as high-quality businesses holding something close to an oligopoly over large parts of what they do, and volumes and rates now inflecting up. Aerospace he framed through the structure of the industry.
The comparison he used for it
How did Warren Buffett make money? He owned a lot of monopolies.
Darren Lekkerkerker
Where he puts aerospace on that scale
Aerospace maybe doesn't come to mind when you think about what's a monopoly, think about like the phone company or something, aerospace maybe is a sneaky monopoly.
Darren Lekkerkerker
Parts and services have to be regulated, which produces strong margins and cash flow, and more people want to travel while Boeing and Airbus remain behind, a gap that worsened during the pandemic. He has moved the position out of aftermarket services, which did well from 2023 through 2025 while the existing fleet worked harder, and into companies selling parts to the manufacturers.
12. Copper, Gold, Not Oil
In the materials side of Global Natural Resources, which he runs alongside Joe Overdevest's energy book, the two positions are metals.
The two metals he wants
I am bullish on copper and I'm bullish on gold.
Darren Lekkerkerker
Copper was weaker on the day on speculation that the US may not tariff it, which had made it a tariff beneficiary. His case is supply.
Why he says the copper price is not a bubble
Last year and this year we're not making more of it. I think that shows it's not a bubble.
Darren Lekkerkerker
Where the supply problem sits
If you look at many of the top 10 mines around the world they are either not producing or producing well below their nameplate capacity due to problems with geopolitics with their countries or problems with the operations of the mine.
Darren Lekkerkerker
Mines are hard to run, which he treats as the standing explanation for the price of copper and other metals.
What gold is pricing
I think in gold, I think it's a lot to do with the dollar debasement trade.
Darren Lekkerkerker
Central banks and others diversifying away from the dollar is the driver he thinks continues, and his evidence is that US rates have gone up while the dollar has been flat to lower and gold has risen. Oil is where he parts company with the rally.
The signal in the oil stocks
Today, oil like WTI got to above $100 a barrel but you know what's super interesting, you'd expect oil stocks are ripping and they're not.
Darren Lekkerkerker
The crude price rests on the conflict and the closure of the Strait of Hormuz, with no obvious end to either, and he expects oil to flow again eventually against supply that exceeds demand by a few million barrels a day.
So the resource money goes elsewhere
Within the portfolios that I run I focus more on investing in metals and the resource trade over energy.
Darren Lekkerkerker
The energy-adjacent ideas he does like are commodity chemical companies, with fertilizer starting to become interesting on a higher corn price that he put down to poor weather in Europe and the US and to the same Hormuz closure. He credited Overdevest, his partner on the fund for almost 20 years, with getting the refining trade right this year.
13. Rates Up for Good Reasons
Asked whether rising Treasury yields concern him as an equity investor, Lekkerkerker said they do, then separated the possible causes.
The cause that would worry him
If they're going up because of inflation and we're going to be the start of a massive rate hike cycle then that's super concerning.
Darren Lekkerkerker
The cause he thinks is operating
I think it has more to do with strong growth overall in the economy as well as competition for fundraising both in governments with their deficits as well as private companies to fund the AI capex buildout.
Darren Lekkerkerker
That, he argued, is a different setup from 2022, when rates were at zero before inflation and a long tightening cycle.
The honest version of his answer
I don't want to say it doesn't concern me because when the 10-year goes out the market tends to go down that day but it seems like it's going up maybe for not the wrong reasons.
Darren Lekkerkerker
He credited David Wolf and the global asset allocation team at the firm with the macro work behind it.
Bonus Insights
Asked for the biggest risk to North American equities over the next 12 months, Lekkerkerker gave the market's answer and then his own.
Why he does not run the portfolio off the macro
I think if you focus on macro I would have compounded returns at a much slower rate because there's always a worry.
Darren Lekkerkerker
He is not arguing for ignoring the risks, only that the alternative has paid better: finding companies whose earnings can compound faster, or for longer, than the market appreciates. His own start is the evidence he offered for how much luck sits inside a record.
The timing he called fortuitous
I actually took over the fund in January of 2009, market bottomed, generational market bottom in March of 2009.
Darren Lekkerkerker
Two conferences in Toronto are next, one on energy and one on Canadian consumer companies, in what he described as a very busy September for company meetings. He also pointed to a change in how the meetings happen: large buy-side firms now host their own conferences, and at one hosted by a competitor in Boston he met the chief executives of a large senior housing company, several technology companies and a bank in a room of about ten people.
On where the funds fit, he described North American Equity as a one-stop shop at 70% US and 30% Canadian, American Equity for an investor who wants more US exposure, and Canadian Balanced, whose equity sleeve he runs under Wolf's team, as the conservative option.
Lekkerkerker's bottom line is that the compounding comes from company selection rather than from the macro, and that right now the companies clearing his 15% bar are in Canadian banks and industrials, copper and gold, aerospace parts and the businesses the artificial intelligence trade sold off.
Products, Companies & Tools Mentioned
Fidelity American Equity Fund (The 100% US mandate he took over on 5 January, with the ability to hold 10% outside the US)
Fidelity North American Equity Fund (70% US and 30% Canadian, run for 11 years and the template for the American fund)
Fidelity Global Natural Resources Fund (Co-managed with Joe Overdevest, who runs the oil and gas side while Lekkerkerker runs materials)
Fidelity Canadian Balanced Fund (He has run the equity portion since January 2009, under David Wolf's asset allocation team)
Boeing and Airbus (Both still behind on production, which he says leaves a long runway for parts suppliers)
Copper and gold (His two bullish metals: copper on supply and unbuilt production, gold on central banks moving out of the dollar)
The S&P/TSX Composite (Rising through the trade war alongside the Canadian dollar, the banks and the industrials)
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