Since the decline in energy-tanker traffic through the Strait of Hormuz, a key waterway through which about 20% of world’s oil and natural gas passes, Fidelity Portfolio Manager John Sheehy has been investing in energy companies he believes are well-positioned amid increased demand for alternative sources of supply.
“I expect countries that rely on the strait to reduce that dependence on what has been a key bottleneck since early 2026,” says Sheehy, who manages Fidelity® Equity Dividend Income Fund (FEQTX). “Beyond that, I think sovereign nations likely will take a hard look at their entire energy supply chain, with an eye toward making it more resilient and less vulnerable to disruption.”
In overseeing the yield-oriented portfolio, Sheehy’s investment approach is rooted in his belief that dividends contribute a significant portion of total return over time and that a portfolio of stocks with above-market dividend yields and growth, combined with below-average valuations, can match or exceed the performance of the broad market over a full market cycle, while exhibiting lower volatility.
The range of possible outcomes for the ongoing conflict in Iran remains wide, says Sheehy, ranging from a rapid normalization of tanker traffic through the strait to continued flare-ups of violence that result in intermittent partial or complete closures of this vital waterway.
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Against this backdrop, he recently increased the fund’s position in Houston-based Cheniere Energy (LNG), a key supplier of liquefied natural gas, and a company he believes is positioned to benefit from demand related to supply restrictions in the Strait of Hormuz. Cheniere owns and operates the Sabine Pass LNG terminal in Cameron Parish, Louisiana, and the Corpus Christi LNG terminal on the Texas Gulf Coast. Importantly, Cheniere is the No. 1 LNG exporter in the United States.
According to the International Energy Agency, about 93% of Qatar’s and 96% of the United Arab Emirates’ LNG exports transit through the Strait of Hormuz, accounting for roughly 19% of global LNG trade. Sheehy believes countries seeking more reliable sources of that commodity could shift additional business to Cheniere Energy – an outsized position in the portfolio as of August 31, 2026. Sheehy also cites his overweight in ExxonMobil Holdings (XOM). In general, he aims to limit the fund’s exposure to large, integrated energy companies, as these stocks tend to be sensitive to crude oil and natural gas prices.
However, he favors certain large, dividend-paying energy firms with what he believes are long-duration, low-cost assets, including ExxonMobil and Shell (SHEL), two of the fund’s top holdings, as they could help soften the blow during a weaker commodity market should the bottleneck in the strait ease.
“Cheniere has the ability to capture increased demand while the strait is restricted or closed,” says Sheehy, “while ExxonMobil and Shell have diverse businesses and project portfolios that could enable them to grow even in a volatile energy environment.”
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John Sheehy is a portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Sheehy manages the Fidelity Advisor Equity Income Fund and Fidelity Equity Dividend Income Fund. Additionally, he co-manages the information technology and telecommunication services sleeves of Fidelity Stock Selector Large Cap Value Fund, Fidelity Series Stock Selector Large Cap Value Fund, and Fidelity Advisor Series Stock Selector Large Cap Value Fund.
Prior to assuming his current responsibilities, Mr. Sheehy co-managed Fidelity Select Banking and Select Defense and Aerospace Portfolios. He also covered various sectors as an analyst at Fidelity, including banking, aerospace and defense, and paper and packaging.
Before joining Fidelity in 2007, Mr. Sheehy worked as an audit manager at Deloitte. He has been in the financial industry since 2007.
Mr. Sheehy earned his bachelor of arts degree in economics and accounting from the College of the Holy Cross and his master of business administration degree in finance from New York University’s Stern School of Business. He is also a Certified Public Accountant (CPA).