Last month Under the Radar Report conducted its annual New Year’s Round Table with six of Australia’s top performing fund managers.
It really does pay to listen to these guys. Back in December 2012, Jack Collopy, who manages more than $1.2 billion for Perpetual Investments, said that his “out of the box” idea was for oil to go to US$75. Who else would have predicted back then when it was trading at US$100 a barrel, that two years later it would be less than half that price, with some predicting it will fall to US$20 before the year is out?
The other round table big guns
In addition to Collopy, we spoke to Karl Siegling of Cadence Capital and Geoff Wilson of Wilson Asset Management, both of whom are also on our investment committee. As well, we heard from one of the hottest fund managers going around (in terms of performance) Ausbil Microcap’s Chris Prunty and also Under the Radar Report’s fund manager, The Idle Speculator and one of our columnists, Andrew Brown, who was previously head of equities for Rothschild.
First, just to get it out of the way, Jack Collopy’s out of the box idea this time is for gold to be priced at US$1400 an ounce. Gold has been bouncing from lows of just under US$1,200 an ounce to three month highs of US$1,235 on oil’s continual slide, coupled with economic fears in the US. Collopy’s fund owns Alacer Gold (AQG), and the copper/gold producers Altona Mining (AOH) and PanAust (PNA).
For the record, Collopy lists his other favoured stocks as the gaming technology provider Ebet (EBT) and the advertising group Enero (EGG).
Andrew Brown says he’s not a “massive gold bull” but is looking at adding lower cost gold miners to his portfolio.
Resources & banks
Moving through to resources in general, Geoff Wilson and Karl Siegling have been successful bears for the past couple of years and are not changing their tune. If he was to invest in resources however, Geoff Wilson says that he would pick the lowest cost producer at the big end of town (meaning BHP Billiton).
Wilson thinks Banks are too expensive, but Siegling continues to be one of their biggest fans because the low interest rate environment is set to continue (which Wilson happens to agree with, by the way). Siegling’s biggest holding continues to be Macquarie Bank.
Energy's out and surf's up
Chris Prunty says, “My New Year’s resolution last year was to “do less in Energy”. That worked pretty well but I wish I’d extended it to include mining and mining services. I also avoid the Ivy on a Saturday night.”
Prunty’s fund contains about 40 stocks, but lists online surf and board sports retailer Surfstitch (SRF) as one that’s under the radar and could surprise. “There is a lot of scepticism around the stock because the reported earnings of the company hide its true earnings power.”
Don't go against the trend
Karl Siegling says that he made a foray into mining services, but will not be doing so again any time soon: “The lesson is one that gets repeated again and again… do not buy stocks that are falling in price and stay away from sectors in free-fall.”
Andrew Brown, on the other hand, has invested considerable energy (and money) in Seven Group (SVW) because of its shovel supplying qualities.
Equity market support
Under the Radar Report’s The Idle Speculator feels that low interest rates and the oil price fall will provide support for equity markets in 2015 and lists retailer Specialty Fashion (SFH), carbon fibre technology specialist Quickstep (QHL) and the mobile payments specialist eServGlobal (ESV) as stocks that he owns and should continue to generate big returns.
A final thought
I’ve come up with some of the highlights to a wide-ranging discussion, the full transcript of which you can read if you subscribe to Under the Radar Report.
There wasn’t too much agreement in the round table, but there were a lot of ideas to get you thinking about the year ahead.