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4 top stock picks for a champion portfolio

Warren Buffett’s annual charity lunch routinely sees cashed up fans bid over $1 million for the opportunity to dine with the billionaire, however back in 2007 an investor by the name of Mohnish Pabrai got a relative bargain when he and a friend won the auction with a winning bid of US$650,100.

One of the reasons Pabrai gave for paying for the lunch was that he wanted the opportunity to say thank you to Buffett for being so open which his teachings on investing.

Pabrai describes himself as a ‘cloner’. In other words he studies what other successful investors are doing and tries to incorporate their processes, thinking and ideas into his own. Pabrai recently stated during a lecture that he rarely has a unique stock idea; rather he closely follows the publically available portfolio positions of a select group of successful investors and uses these disclosures as his idea base.

In essence there is no prize for coming up with a unique investment idea – just focus on coming up with profitable ideas! Here are four champion Australian funds and some of their largest portfolio positions. Reviewing their portfolios can generate ideas and leads, but remember that the price level at which a stock position has been established is a critical factor too.

  1. WAM Capital Limited (ASX: WAM) is a listed investment company (LIC) valued at over $640 million, one of its largest positions is Fairfax Media Limited (ASX: FXJ).
  2. K2 Asset Management Holdings Ltd (ASX: KAM) is a fund manager that runs both Australian and International funds. Its K2 Australian Fund has been established since October 1999. Its largest large cap position at 31 May was Flight Centre Travel Group Ltd (ASX: FLT).
  3. Perpetual Limited (ASX: PPT) is one of the largest boutique fund managers in Australia. Its outperforming Pure Value Share Fund holds National Australia Bank Ltd. (ASX: NAB) as its largest position.
  4. IOOF Holdings Limited (ASX: IFL) owns the successful Perennial investment management. The Perennial Growth Australian Shares Trust is overweight BHP Billiton Limited (ASX: BHP) – this is the Trust’s single largest position.

An even better bet for your portfolio

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Motley Fool contributor Tim McArthur owns shares in Perpetual Ltd.

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