Wed Apr 16, 2014 5:36pm EDT
<span id="articleText"/>(Adds commentary on software in 5th, 6th paragraphs)
<span id="midArticle_0"/>By <a href="http://redirect.viglink.com?key=11fe087258b6fc0532a5ccfc924805c0&u=http%3A%2F%2Fblogs.reuters.com%2Fsearch%2Fjournalist.php%3Fedition%3Dus%26amp%3Bn%3Dtim.mclaughlin%26amp%3B"/>Tim McLaughlin
<span id="midArticle_1"/>BOSTON, April 16 (Reuters) - Fidelity Investments' $109 billion Contrafund continues to avoid big oil companies, but added to its position in electric car maker Tesla Motors Inc in the first quarter as portfolio manager Will Danoff cut exposure to biotech stocks ahead of the recent sell-off in that sector.
<span id="midArticle_2"/>Contrafund returned 0.47 percent in the first quarter, lagging the 1.81 percent advance of the S&P 500 Index. Amazon.com Inc was the fund's biggest detractor, but Danoff maintained his overweight position in the stock, according to his first-quarter commentary released on Wednesday.
<span id="midArticle_3"/>Tesla, meanwhile, helped the fund in the first quarter.
<span id="midArticle_4"/>"Our long-term fundamental view for Tesla remained positive, and we added modestly to the fund's position in the stock," according to the Contrafund commentary.
<span id="midArticle_5"/>Danoff acknowledged that the stock prices of software as service companies are high, but he remains confident in the growth outlook for these firms.
<span id="midArticle_6"/>"Corporations are rapidly adopting the software-as-a-service model, where they effectively "rent" the latest software," the fund said in its commentary. "(It) is cheaper, more-effective, and easier to manage than the old client-server product."
<span id="midArticle_7"/>In contrast, Danoff said he doesn't believe Exxon Mobil and Chevron have strong growth prospects.
<span id="midArticle_8"/>"The energy sector was the fund's largest underweighting at period end, as we believed strong U.S. shale gas and oil production could suppress prices and profits," according to the Contrafund commentary. (Reporting by Tim McLaughlin; Editing by Eric Walsh and Andrew Hay)
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