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Legendary investor tips Shopping Centres Australasia as a top pick

Anton Tagliaferro is a name synonymous with value investing in Australia. As the founder and Investment Director of fund manager Investors Mutual, which manages over $4 billion in funds and has produced market beating performance since its inception in 1998, Anton’s commentary on stocks is always closely followed by the investment community.

In a recent interview published in the Herald Sun, when pushed for a stock pick by the interviewer Anton stated that he liked the “out of favour and low profile” real estate investment trust Shopping Centres Australasia (ASX: SCP).

SCA was spun out of retailer Woolworths (ASX: WOW) in October 2012 and houses around 69 shopping centre assets that generally include Woolworths supermarkets as a major tenant. As Anton stated in the interview, “With a 7 per cent yield and 20-year leases from Woolworths, that’s not too bad.”

Investor Mutual’s flagship fund, the IM Australian Share Fund, has $1.85 billion in funds under management and has returned 11.8% per annum since inception, which is an outperformance of nearly 3% per annum compared with its benchmark. The largest position in the portfolio is Westpac Bank (ASX: WBC). In second place is BHP Billiton (ASX: BHP), however Investor Mutual notes that the portfolio remains “cautious and underweight the resource sector given our concern on the medium term outlook for many commodities, particularly iron ore, due to continued rapid growth in supply, which in our view at some stage will seriously undermine the price.”

Also a top 10 portfolio holding is Insurance Australia Group (ASX: IAG), which the fund manager describes as its preferred pick of the insurers. It expects IAG will produce another strong result in financial year 2014 thanks to the Australian operations as well as improvements from IAG’s New Zealand and Malaysian operations.

Foolish takeaway

Keeping an eye on what top performing fund managers are doing can certainly be useful for all investors and Anton’s comments surrounding Shopping Centres Australasia are definitely worth further investigation by inquisitive investors.

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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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