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Caltex Australia Limited, Cochlear Limited, Tabcorp Holdings Limited: Should you buy today?

There are a number of things to like about the recently launched listed investment company (LIC) Future Generation Investment Fund Ltd (ASX: FGX).

Firstly, there’s the fact that the 1% management fee charged by the LIC doesn’t go to the fund managers who are running the portfolio but rather it goes to around 14 carefully selected charities.

Secondly, that management fee of 1% is actually lower than what many externally managed LICs charge at any rate – so not only is there a lower fee but the fee that is charged is doing good!

Thirdly, investing in the Future Generation Investment Fund provides shareholders with access to the skills of a number of leading fund managers, some of which are hard for individual retail investors to otherwise access.

One of those top performing fund managers is Paradice Investment Management (PIM) who is responsible for managing approximately 10% of the company’s portfolio. Paradice recently revealed three of the purchases it had made for the LIC since September.

1. Caltex Australia Limited (ASX: CTX) is a leading Australian provider of petroleum products. The timing of this purchase looks impeccable with the share price gaining an incredible 25% in the past three months.

In commenting on the purchase PIM noted: Caltex had “a strong performance in the retail market and the refinery shutdown is running to plan.”

2. Cochlear Limited (ASX: COH) is a leading global provider of cochlear implantable hearing devices. The stock is up 6.5% in the past three months.

In commenting on the purchase PIM noted: Cochlear’s “new products are gaining traction and foreign exchange changes provide future potential.”

3. Tabcorp Holdings Limited (ASX: TAH) is a leading wagering and betting company and includes the operation of Keno in a number of States. Once again Paradice’s timing looks very good with the stock up 20.5% in the last three months. In comparison the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down 2% over the same period.

In commenting on the purchase PIM noted: “Wagering growth is coming through and holding margin with the move to online and fixed odds.”

Should you buy?

Following a top performing investor’s buy and sell decisions can be a good thing but there are a few things to remember:

Firstly, their holdings are part of a portfolio and like any portfolio not every investment will turn out well. Secondly, it’s important to know what their purchase price was. Thirdly, they won’t necessarily tell you if they change their view on a stock’s prospects or when they decide to sell.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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