Fund managers go global for top Sohn conference stock picks over Aussie companies

AMP’s board must focus on breaking up and selling parts of the 173-year group in an orderly way, to avoid repeating “bad old habits” and making ill-fated acquisitions.

That’s the view of Samuel Terry Asset Management founder Fred Woollard who on Friday outed AMP as his top stock pick at the Sohn Hearts & Minds investment conference in Hobart.

“The sum of the parts are worth substantially more than its market capitalisation,” he said, delivering the value manager’s first presentation to the conference, which is in its seventh year.

Mr Woollard said AMP’s shares were worth at least $2 and up to $2.17 on his model, versus its current price of $1.285.

He outlined that asset sales meant AMP would soon have surplus cash of more than $2bn, it owned a profitable bank, wealth business in New Zealand while its platform business was worth about $1bn. Samuel Terry’s AMP model put the value of its three international minority stakes at least $685m or up to $1bn.

“AMP‘s mix of assets do not belong together. There are no synergies between an Australian and New Zealand wealth manager and a minority stake-owned Chinese pension manager,” Mr Woollard said. “Keeping these assets together is costing AMP shareholders lots of money. Shrinking and simplifying AMP should not be rushed, it should be done in an orderly and considerate (manner).”

While AMP was one of four local stocks among the best picks at the Sohn conference, it was international stocks – including those across laboratory services, semiconductors and retail – that dominated the top picks.

Cooper Investors’ founder and investment chief Peter Cooper named Eurofins at his top pick for this year. The Luxembourg-headquartered group provides lab testing and support services to the pharmaceutical, food, environmental industries, among others.

“One of the attributes of the service is it’s really cheap,” Mr Cooper said. He noted Eurofins conducted 450 million tests per annum at a cost of about $15 per test for things such as food safety.

“Every year in this industry of testing, volumes are going up 5 per cent a year,” he said.

“It’s a terrific dynamic in a mission-critical product.”

Peter Cooper at Sohn Hearts & Minds Investment Leaders Conference in Hobart.
Peter Cooper at Sohn Hearts & Minds Investment Leaders Conference in Hobart.


Mr Cooper – whose firm manages $10.5bn – also highlighted Eurofins was delivering returns of 26 per cent per year for shareholders, surpassing returns of local stocks CSL and Macquarie Group.

“We think this thing’s worth €100 ($155) a share,” he said. Eurofins last traded at €66.50.

Claremont Global portfolio manager Bob Desmond picked sportswear giant Nike as his top pick. Just buy it, he quipped.

He said the company was “hoovering up data” that allowed it to innovate and deliver the right product to consumers, and had targeted having 60 per cent of sales made direct to consumers by 2025. Mr Desmond estimated Nike would get a 100 basis point tailwind from bypassing retailers.

The Sohn conference, held annually, had before Friday’s event made more than $40m in collective donations to medical research. It applies the stock picks made by fund managers in an investment portfolio. The listed fund’s latest performance update noted 8.3 per cent returns per annum since inception in November 2018, but it cited “disappointing” underperformance in October. Among its top 10 holdings are Alphabet, BHP, Visa and Zillow.

Tribeca Investment Partners portfolio manager Jun Bei Liu opted for a Chinese retail stock for her best pick. China Duty Free Group – the biggest duty free operator in the world – offered a “phenomenal opportunity” due to an expected “explosion of (Chinese) tourist numbers” in coming years as the pandemic receded, she said. Ms Liu noted growth would be delivered as the company pursued geographic expansion.

Tribeca Investment Partners portfolio manager Jun Bei Liu opted for a Chinese retail stock for her best pick. Picture: Jane Dempster
Tribeca Investment Partners portfolio manager Jun Bei Liu opted for a Chinese retail stock for her best pick. Picture: Jane Dempster


Munro Partners founder and investment chief Nick Griffin highlighted Dutch-listed company ASML as his stock pick.

ASML produces lithography tools for the production of semiconductors and Mr Griffin said the group was “a monopoly” in the high-end part of the market selling its products to companies including Samsung and Intel.

“We see ASML’s (earnings-per-share) growing from €14 today to €41 by 2025 … we expect their earnings to accelerate,” Mr Griffin said, noting the stock had fallen in line with other semiconductor shares, but should “grow dramatically” in coming years.

Eminence Capital founder and chief executive Ricky Sandler named California-based New Relic, a company that allows organisations to monitor IT infrastructure, as his best pick.

The $US4bn market cap company develops cloud-based software to help website and application owners track the performance of their services.

“Up until recently they had been losing share based on their transition to a new product platform in 2020 and 2021,” Mr Sandler said. “The stock trades at a big discount to its peers.”

Over five years, NextDC, JB Hi-Fi, TradeDesk, Nickel Mines and MinRes are among the best performers among the conference picks. Among the worst, based on current prices, are Coinbase, Ping An, Teladoc Health, Spotify and Megaport, which have tumbled more than 70 per cent since they were pitched in 2020 and 2021.



This article was originally posted by The Australian here.

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Disclaimer: This material has been prepared by The Australian, published on 18 November 2022. 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.

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