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

There are lots of investment ideas out there and lots of ways to get them but this could be THE INVESTMENT IDEA of the year, so don't miss out! The Motley Fool's top dividend stock for 2014 offers growing sales, accelerating profits and a grossed up dividend yield of 7%! Find out the name and code right now -- your copy of "The Motley Fool's Top Dividend Stock for 2014" is FREE. Simply click here!

Motley Fool contributor Tim McArthur owns shares in Perpetual Ltd.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.