2 ASX All Ords shares to buy delivering 'exceptional cash flows': fund manager

These stocks could be solid picks and pay big income too.

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Share prices are always changing on the stock market, so different opportunities are opening up. A fund manager has highlighted two All Ordinaries Index (ASX: XAO) shares that could be very appealing to investors.

The fund manager in question is Contact Asset Management, which has a fund that aims to find businesses that can deliver returns of more than 10% per annum and provide a mixture of growth and income.

Contact said that it added to its highest-conviction positions in September amid negative market sentiment.

The two companies below were highlighted by the fund manager and they were two of the largest in its portfolio in the latest monthly fund report.

Deterra Royalties Ltd (ASX: DRR)

This business describes itself as a mining royalties business. It receives an ongoing royalty of 1.232% of Australian-denominated quarterly revenue from the Mining Area C (MAC) royalty area of BHP Group Ltd (ASX: BHP).

Additional one-off capacity payments of A$1 million per 1 million dry metric tonne (Mdmt) increase in annual mine production are determined for the period ending 30 June. The current demonstrated annual capacity level is set at 118 Mdmt.

Contact Asset Management said that iron ore prices at US$120 per tonne are delivering "exceptional cash flows" to the ASX All Ords shares thanks to the MAC royalty.

The fund manager believes Deterra has a "strong" balance sheet and pays a grossed-up dividend yield of approximately 10% while generating a return on equity (ROE) of more than 100%.

Contact said that this is a "high-quality" business providing exposure to the resources sector.

GQG Partners Inc (ASX: GQG)

The other ASX All Ords share that it pointed to was the US-based fund manager GQG which offers a number of investment strategies in the US and is growing geographically to places like Australia and Canada.

Contact is "optimistic" on the company's prospects and has been building its position in the business.

At 30 September 2023, GQG had funds under management (FUM) of US$105 billion. Contact noted that GQG is experiencing net inflows at a time when other fund managers are seeing net outflows, yet GQG is "being valued on similar multiples to its growth-challenged peers".

The investment team think that the ASX All Ords share is a "compelling opportunity".

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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