MENU
 

PRE TAX NTA |$3.75

Value as at close of business on 3 January 2024

Chris Kourtis is on a winning streak. Here’s his next ASX pick

Chris Kourtis thinks he’s found another winner.

“It’s a stock I’ve known for a long time. I’ve missed the big run over the last few years, but we’ve recently gone back in,” he tells The Australian Financial Review. “I think it’s the last chance to have a bite at the cherry before the strategy plays out.”

Chris Kourtis, portfolio manager at Ellerston Capital, is on a hot streak. Picture: Dominic Lorrimer

The Ellerston Capital portfolio manager is talking about retail giant Premier Investments. As with many of Kourtis’ investments, his decision to buy in appears at odds with the market.

Shares in the retailer sank 13 per cent last month after revealing a sales slump and plans to delay the demerger of its Smiggle and Peter Alexander businesses.

“Obviously, the market has been disappointed by their recent result,” he says. “But at the end of the day, it’s a very well-run business. The balance sheet is pristine.”

He is confident that despite the concerns floating around the market, the company can make good on its growing list of promises, including the spin-offs and a possible merger of its apparel brands with department store Myer.

“They will demerge Smiggle and Peter Alexander. That’s been pushed out, but not abandoned,” Kourtis says. “The focus now is on consummating the Myer merger with Premier’s apparel brands, and that will add value to shareholders.”

Kourtis says Premier’s large stake in ASX-listed kitchen appliances maker Breville should help abate some of the other concerns baked into the share price. “If you add up the billion-dollar Breville holding with their Myer holding, with the net cash, you’re not paying a lot for the residual businesses,” he says.

Perhaps most important for Kourtis, however, is that the company remains very much in the hands of famous merchant Solomon Lew.

“The best retailer in Australia has hands on all over those businesses. He will walk into a store on a Saturday with a baseball cap and a fake moustache, sunglasses and see how long it takes the assistant to serve him,” Kourtis says.

“I’ll back Solly all day, every day. He doesn’t miss a trick and that’s why he’s built a very successful business over 50 years.”

If his call on Premier Investments proves fruitful, it will cap an impressive string of turnaround bets by Kourtis who’s developed a reputation for calling the bottom for some of the ASX’s most notable out-of-favour companies.


Stock picking with a side of dip


When Kourtis stepped onto the stage at last year’s Sohn Hearts & Minds event in Sydney, the famed contrarian investor named ASX health-techs ResMed and CSL as his picks.

At the time, Kourtis went out on a limb, saying the concerns that weight-loss drugs such as Ozempic would reduce the need for the services offered by both companies were overblown. “Some of my best returns have come from picking a turnaround story and, like ResMed, just at that inflection point when the market’s maximum bearish,” he says.

It was a good call. While Kourtis would sell out of his CSL shares several months later, notching a decent return in the process, his Ellerston Australian Share Fund still owns ResMed. When he stepped off the Sohn stage in November last year, the shares were trading at around $20 apiece. They last traded just below $36.

In June, Kourtis made another controversial pick, telling investors in a closed-door briefing that he was backing troubled packaging giant Orora. The shares surged more than 30 per cent in the weeks following, and Kourtis sold shortly after. “It’s not cheap any more, so I’ve left the building – I only buy cheap things,” he adds.

Andrew Forrest’s Fortescue is another recent addition after the stock slumped around 30 per cent. He’s already taking some profits from the iron ore producer. “We’ve halved our position on that recent bounce up,” he says. “With resource stocks, sometimes you just got to trade them.”

The latest run of dip-buying successes has helped solidify Kourtis’ reputation as a buyer willing to step in when others shy away.

 

Value traps and falling knives


That contrarian approach can often land investors in the dreaded “value trap” when a sold-off stock looks cheap but ultimately fails to rebound – or in the case of embattled casino operator Star Entertainment, continue to dive. “The hardest thing in funds management for anyone who’s got any valuation discipline is [to] avoid the value trap.”

That’s proved the case for investors at the WAM Leaders Fund, which made a big bet on Star last year only for the stock to plummet with the casino operator nearing financial collapse in subsequent quarters.
“A lot of really smart investors have been caught with their pants down, and a lot of them will regret those decisions,” Kourtis says, adding he hasn’t owned the stock in years, last trading out when it still held a “five-handle”.

“That’s $5 not 5¢,” he says. Star’s shares last traded around 25¢.

So with the shares now in the doldrums, is the stock piquing the portfolio manager’s interest? “Would I buy it at 25¢? No – I think it could go to zero.”

He says the decision to steer clear of Star was, in part, informed by his own mistake made nearly a decade earlier, when shares in BlueScope Steel were trading at similarly cheap levels. “I caught the falling knife,” he says. “It was trading at a massive discount price to book and then suddenly they lost $500 million [in earnings]. I didn’t see that one coming and got it right between the eyes.”

He says the “painful error” cost the fund returns. Kourtis quickly sold out at around 85¢ – it would eventually decline to around 30¢.

A year on from his ResMed pick, Kourtis is preparing his next selection for the Sohn Hearts & Minds 2024 Conference in Adelaide next month. While he’s tight-lipped on his stock pick, the themes for this year’s event will explore space, artificial intelligence, geopolitics and biosciences.


The Australian Financial Review is a media partner of Sohn Hearts & Minds.

This article was originally posted by The Australian Financial Review here. Licensed by Copyright Agency. You must not copy this work without permission.

Disclaimer: This material has been prepared by the Australian Financial Review, published on 21 October 2024. HM1 is not responsible for the content of linked websites or content prepared by third party. The inclusion of these links and third-party content does not in any way imply any form of endorsement by HM1 of the products or services provided by persons or organisations who are responsible for the linked websites and third-party content. This information is for general information only and does not consider the objectives, financial situation or needs of any person. Before making an investment decision, you should read the relevant disclosure document (if appropriate) and seek professional advice to determine whether the investment and information is suitable for you.

Recent Posts

Read the latest insights
A curated list of HM1 investor updates, portfolio news and other interesting articles.
Read More
10 top fund managers reveal their long-term stock picks
With valuations stretched and geopolitical tensions high, the new year offers plenty of potholes for investors. 
Rikki Bannan – Don’t get caught up in momentum
Conference Fund Manager Rikki Bannan, Executive Director at IFM Investors, joins Equity Mates to discuss her standout 2023 stock pick, Telix, and explore what opportunities lie ahead.
Professor Jane Butler: Sparking Hope for Spinal Cord Injuries
In this episode of the Hearts & Minds Podcast, we sit down with Professor Jane Butler to discuss her groundbreaking research into spinal cord injuries.
Nick Griffin – The Nvidia story is not over
Nick Griffin, Founding Partner & Chief Investment Officer of Munro Partners joined the Equity Mates podcast in their Summer Series.
 

10 top fund managers reveal their long-term stock picks

With valuations stretched and geopolitical tensions high, the new year offers plenty of potholes for investors. 

Read More
December 28th, 2024
 

Rikki Bannan – Don’t get caught up in momentum

Conference Fund Manager Rikki Bannan, Executive Director at IFM Investors, joins Equity Mates to discuss her standout 2023 stock pick, Telix, and explore what opportunities lie ahead.

Read More
December 19th, 2024
 

Professor Jane Butler: Sparking Hope for Spinal Cord Injuries

In this episode of the Hearts & Minds Podcast, we sit down with Professor Jane Butler to discuss her groundbreaking research into spinal cord injuries.

Read More
December 10th, 2024
 

Nick Griffin – The Nvidia story is not over

Nick Griffin, Founding Partner & Chief Investment Officer of Munro Partners joined the Equity Mates podcast in their Summer Series.

Read More
December 9th, 2024
 

HM1 CEO Succession

Hearts and Minds Investments Limited advises that Paul Rayson intends to retire from the position of Chief Executive Officer, effective 19 February 2025.

Read More
December 5th, 2024
 

Trump unifies top investors in decade-long bullish outlook for US

Nick Moakes, CIO of the $72 billion Wellcome Trust, told the conference that too many investors were banking on a return to the ultra-low interest rates that prevailed over the past decade.

Read More
November 20th, 2024
 

These rock-star stock picks could get markets talking next year

Eleven rock stars of international and local funds management took to stage – each tasked with picking and pitching one company whose shares will take off over the next year.

Read More
November 18th, 2024
 

Is anyone brave or stupid enough to bet against America?

Stock pickers have been punished for betting against the US. The choice between consensus and contrarianism on American exceptionalism is now harder than ever.

Read More
November 17th, 2024
 

Sohn: NYSE-listed Estee Lauder’s Northcape Capital pick

Northcape Capital’s Fleur Wright this gives a rare opportunity to buy a high quality company at an attractive price.

Read More
November 15th, 2024
 

Sohn ASX stock pick: Ellerston Capital’s Chris Kourtis backs Perpetual

Chris Kourtis has put his biggest bet on embattled Perpetual – picking one of the most hated stocks on the ASX – that he believes will soon be the ‘cheapest listed asset manager of scale in the universe’.

Read More
November 15th, 2024
 

AI start-ups a threat to incumbent big companies

Paul Bassat predicts emerging artificial intelligence companies will disrupt sectors and overtake established incumbent companies just as rapidly as the seismic shifts that took place when the internet emerged in the mid-1990s.

Read More
November 15th, 2024
 

Howard Marks and Sohn’s big stars reveal seven rules for investing

Among the stock picks and stunts at the Sohh Hearts & Minds event, Howard Marks and Nick Moakes provided investors with long-term rules for playing markets.

Read More
November 15th, 2024
 

Sohn investors position for bullish but bumpy Trump ride

Australia and the rest of the world must adjust to a new Trump presidency that will deliver an expected bull market but also disruption, with the leader in waiting prepared to “create pain” to get his way.

Read More
November 15th, 2024
 

Sohn stock picker experts name best shares to invest in for year ahead

‍Don’t overlook down and out silver miners, legacy skincare brands ready for a revival and a big financial company suffering from a severe case of shareholder wealth destruction.

Read More
November 15th, 2024
 

Eleven stock tips from Sohn to get you through 2025

“There’s no finer place for the finance festival than in the festival city,” said Matthew Grounds. He, along with fellow Barrenjoey co-executive chairman Guy Fowler and investor Gary Weiss, is one of Sohn’s driving forces.

Read More
November 15th, 2024
 

Sohn Hearts & Minds Investments fund targets $1.5bn valuation

‍Hearts & Minds Investments chair Chris Cuffe is hoping for HM1 to grow to more than $1.5bn in the next five years.

Read More
November 14th, 2024
 

Galaxy Digital CEO Mike Novogratz believes bitcoin will hit $US100k

Bitcoin’s bounce to record highs in recent days is only the beginning of a fresh surge higher for cryptocurrency, says US billionaire Mike Novogratz.

Read More
November 9th, 2024
 

Why this New York hedge fund manager sees opportunity in European stocks

Influential New York-hedge fund manager Ricky Sandler will turn to Europe for his next stock pick.

Read More
November 6th, 2024
 

Antipodes’ Ross says short-term wealth hinges on US election

The portfolio manager says defensive stocks pose a bigger risk than the magnificent seven for investors that are overexposed to the American sharemarket.

Read More
November 5th, 2024
 

Concentration risk key for investors: Antipodes Partners’ Vihari Ross

The concentration risk in global stock indexes that has built up during the strong rise over the past year must now be a key consideration for global investors, according to Vihari Ross.

Read More
November 5th, 2024
 

The fundie betting big on China – with help from AI

Mr Mehta is sticking to his well-worn strategy: he’s hunting for companies across Asia that aren’t battling intense competition and have management teams focused on costs, cash generation and high payouts to shareholders.

Read More
November 5th, 2024
 

Why this fundie wants you to ‘wince’ at his stock picks

When fund managers come to pitch their favourite stock at the annual Sohn Hearts & Minds conference, there are two ways they can go: they can play it safe, or they can take a risk and shock the room.

 

Read More
October 29th, 2024
 

IFM Investors’ Rikki Bannan backs small cap investments to rebound after mixed performance

IFM Investors executive director Rikki Bannan believes this year could be a good one to invest in some select small cap stocks.

Read More
October 27th, 2024
 

Meet the 2024 Conference Managers

Following a global search, the Conference Fund Manager Selection Committee is pleased to share eleven new managers for 2024. 

Read More
October 22nd, 2024
 

Chris Kourtis is on a winning streak. Here’s his next ASX pick

Chris Kourtis of Ellerston Capital thinks he’s found another winner and thinks it’s the last chance to have a bite at the cherry before the strategy plays out.

Read More
October 21st, 2024
 

Why Ellerston Capital’s Chris Kourtis plans to back a ‘hated’ stock

Chris Kourtis of Ellerston Capital plans to tip one of the “most hated” stocks in Australia when he presents at the 2024 Sohn Hearts & Minds Conference.

Read More
October 21st, 2024
 

Alex Pollak champions rewards of disruptive investment

Alex Pollak’s funds management company Loftus Peak rode the Nvidia wave and he is now looking at more opportunities in disruptive industry stocks.

Read More
October 14th, 2024
 

Buy Hold Sell: 2 Hall of Fame investors analyse each other's best ideas

Hall of Fame alumni Chris Kourtis of Ellerston Capital joins Livewire to analyse high conviction stock picks.

Read More
October 11th, 2024
 

Sumit Gautam - Why AI won't deliver in 2025 | Scalar Gauge

Sumit Gautam is the Founder of Scalar Gauge and speaks with Equity Mates ahead of his appearance at the Sohn Hearts & Minds conference.

Read More
October 8th, 2024
 

Missed out on Nvidia and Ozempic? This fundie says it’s never too late

Northcape Capital’s Fleur Wright is still kicking herself for not owning market darlings Nvidia and Novo Nordisk, the maker of the weight loss wonder drug Ozempic, before shares of those companies rocketed in 2023.

Read More
September 30th, 2024