Fidelity Heir Sells Some of Her Stock

Fidelity Investments on Friday said that its largest shareholder, Abigail Johnson, long considered a top candidate to succeed her father as chairman and chief executive, sold some of her voting stake in the mutual-fund giant to family trusts.

The news raised doubt about whether Abigail Johnson still was the leading candidate to head the firm when her father, Edward Johnson III, retires.

Fidelity, which manages $1.1 trillion in assets, didn’t say how much of her 24.5% stake was sold. The change didn’t reduce the Johnson family’s ownership of 49% of the Boston-based company, spokeswoman Anne Crowley said. Other Fidelity executives hold 51%.

Abigail Johnson, 43, sold the shares to “generation-skipping family trusts” that benefit current and future family members, Crowley said. The transfer was part of the Johnsons’ “estate-planning and family-succession process,” the spokeswoman said.

Johnson was reassigned in May from Fidelity’s investment-management division to its retirement-service group in a move the firm said would broaden her experience.

The two events suggested that “Abby may not be in line to run the company,” said Christopher Traulsen, a fund analyst at Morningstar Inc.

People inside and outside the firm have long identified Johnson as the heir apparent. The company hasn’t said who is in line to take over for her 75-year-old father.

He “continues to be a very active chairman and has no plans to retire,” Crowley said.

The stock sale was reported Friday by the Wall Street Journal.

The younger Johnson had mixed success in her four years as president of the investment group, Fidelity Management & Research Co. Its funds struggled to match returns posted by rivals including Los Angeles-based American Funds and Vanguard Group.

Fidelity’s Magellan Fund, once the largest stock fund, has gained an annual average of 8.6% in three years, trailing 81% of similarly managed funds.

Fidelity also has endured yearlong regulatory and criminal probes of its equity traders’ acceptance of gifts from outside brokers. The Securities and Exchange Commission has told Fidelity that it may be sued.

Half a dozen stock traders have since left the company, and Scott DeSano, the former head of the group, has been reassigned.

Since former Chief Financial Officer Stephen Jonas replaced Abigail Johnson at the fund unit, the firm has hired new chief investment officers and added analysts to its investment teams.

“It’s pretty clear that the people higher up than Abby thought there was something seriously wrong in the fund unit that needed to be fixed, and that she wasn’t the person to do it,” Traulsen said.

And, he added, “if there isn’t the confidence in her to run the funds unit, is there the confidence in her to run the whole company?”