William Danoff

Not many mutual fund managers have a 19-year tenure on a fund, and only a handful of them were able to outperform their peers in all three major bear markets of the past two decades.

But Fidelity Investments’ William Danoff was among them, according to Morningstar Inc.

Mr. Danoff, who manages the $55.2 billion Contrafund (FCNTX), outperformed his peers in the bear markets of 1991, 2000 and 2008. Through Aug. 30, the fund ranked in the sixth percentile for the five-year period, with an annualized return of 4.89%, and in the fifth percentile for the 10-year period, with an annualized return of 3.40%, each time outpacing the S&P 500 by more than 4 percentage points.

“He has managed to be successful when the fund was small and then when it was really large,” said Christopher Davis, a mutual fund analyst for Morningstar.

“He is uniquely gifted,” said Jim Lowell, editor of the Fidelity Investor newsletter. “Over the meaningful market cycles, he has never lost to the market, downside or upside.”

Mr. Danoff, 49, began his career at Fidelity in 1986 as a research analyst and became manager of the Fidelity Select Retailing Portfolio that year. In 1989, he moved on to become the portfolio assistant for Fidelity’s Magellan Fund.

When Mr. Danoff was named manager of the Contrafund in 1990, its assets totaled $300 million.

In 2003, he began managing the $10 billion Fidelity Advisor New Insights Fund (FNIAX), which has a similar portfolio.

The fund outperformed the S&P 500 with its three- and five-year annualized returns of -2.51% and 2.95%. The fund’s performance ranked in the fourth percentile — outpacing 96% of its peers — for the five-year return, and in the 34th percentile for the three-year period, according to Morningstar.

Mr. Danoff’s history has fueled his popularity among advisers.

“When you want to go to a manager who can deliver for you through various market cycles, he is very clearly the pre-eminent manager at Fidelity,” said John Bonnanzio, editor of the Fidelity Insight newsletter.

“Even when he is underwater a bit, relative to his benchmarks, he has shown that if you stick with him, most of his themes usually play out. In 2006, for example, he was a little behind and he turned it around in 2007 and knocked the ball out of the park,” Mr. Bonnanzio said.

Indeed, when the S&P 500 turned in a 5.5% return in 2007, the Contrafund returned nearly 19.8%.

As manager of a go-anywhere fund, classified by Morningstar as large growth, Mr. Danoff is able to invest across asset classes.

The top 10 holdings account for about 30% of the fund’s total assets.

“He can concentrate assets in his best ideas and there is broad diversification in those holdings,” Mr. Lowell said. “When the market has had dramatic corrections, he will almost always be the first person back in the water.”

Mr. Danoff is a classic stock picker, Mr. Davis said.

“He has a unique ability to analyze companies and understand companies in a way that other managers cannot,” Mr. Davis said.

“He looks for companies that are showing improvements in their business. A lot of growth managers consider 18 months long term,” Mr. Davis said.

Mr. Danoff said that he looks for small- and mid-cap companies that will be next year’s blue-chip growth companies. “One thing I learned over time is that stocks follow earnings per share,” he said.

“The market spends a tremendous amount of time thinking about valuations. I think that time should be spent on why a company will continue to grow, if it can continue to grow, what its capital needs are, and what the risks are to company earnings,” Mr. Danoff said.

Managing a portfolio of some 400 holdings can be a lot of work, he conceded.

But there are advantages to working at Fidelity, Mr. Danoff said.

“I can support a large research staff, and I can have access to senior executives in the industry,” he said.

Indeed, when Mr. Danoff wants to learn more about how a company is doing, he can pick up the phone and call the senior executive.

The hardest decisions are choosing when to sell a stock, he said.

“The real reason to sell a stock is when you have a better idea,” Mr. Danoff said. “The best defense is a good offense. I like to stay on the offensive.”

He has the passion that an investor would want to see in a manager, Mr. Lowell said.

“He has a comprehensive curiosity and a passion for what he does, which enables him to come in every day and want to compete,” Mr. Lowell said.

Mr. Danoff said that he continues to enjoy the thrill of the game.

“I’ve always enjoyed numbers and playing games. The stock market is like a big game,” Mr. Danoff said.

He added that “Fidelity has been an unbelievable environment for me. There is an aggregate collection of motivated, smart and thoughtful folks here.”