Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

30 top stocks picks from 30 fund managers: part 1

We asked 30 fund managers across a range of sectors to pick out their favourite stocks. This is what the first 15 said.

Neil Veitch: SVM UK Opportunities fund

Ryanair

'Hell hath no fury like a holidaymaker grounded.

‘The recent tribulations of Ryanair, Europe’s largest airline, have been gleefully seized upon by the British press, ever keen to knock any business or individual that has dared to be successful. The plight of passengers whose flights have been cancelled has been used to castigate Ryanair, which is being highlighted as an example of all that is wrong with capitalism.

‘Among this noise, it would be easy to forget that for hundreds of millions of passengers Ryanair has been an overwhelming force for good.

‘Customers didn’t necessarily love Ryanair itself, but they certainly did love the opportunities it offered. This remains the case and is the core reason we believe that demand will prove resilient despite recent news flow.

‘Staffing accounts for c.12% of Ryanair’s cost base, of which pilots are around half. We do not believe that any potential increase will significantly erode Ryanair’s marked unit cost advantage over peers or have much impact on the group’s longer-term potential.

‘Currently, trading on an estimated March 2018 PE of c.13x, we believe that concerns over Ryanair’s future are misplaced. While there may be some short-term turbulence, this is an attractive valuation for a company that is still growing fast, has a rock-solid balance sheet and which will continue returning cash to shareholders.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Neil Veitch: SVM UK Opportunities fund

Ryanair

'Hell hath no fury like a holidaymaker grounded.

‘The recent tribulations of Ryanair, Europe’s largest airline, have been gleefully seized upon by the British press, ever keen to knock any business or individual that has dared to be successful. The plight of passengers whose flights have been cancelled has been used to castigate Ryanair, which is being highlighted as an example of all that is wrong with capitalism.

‘Among this noise, it would be easy to forget that for hundreds of millions of passengers Ryanair has been an overwhelming force for good.

‘Customers didn’t necessarily love Ryanair itself, but they certainly did love the opportunities it offered. This remains the case and is the core reason we believe that demand will prove resilient despite recent news flow.

‘Staffing accounts for c.12% of Ryanair’s cost base, of which pilots are around half. We do not believe that any potential increase will significantly erode Ryanair’s marked unit cost advantage over peers or have much impact on the group’s longer-term potential.

‘Currently, trading on an estimated March 2018 PE of c.13x, we believe that concerns over Ryanair’s future are misplaced. While there may be some short-term turbulence, this is an attractive valuation for a company that is still growing fast, has a rock-solid balance sheet and which will continue returning cash to shareholders.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Blake Hutchins: Investec UK Equity Income fund

Next

 

‘The things we look at are flexibility and space. There is no doubt that their physical retail premises are under pressure structurally. If you look at Next’s average lease length for their stores, it is seven years. Now if you compare that to Debenhams, Debenhams’ average lease length is 21 years.

‘Next also provides third-party labels on their website. Many people are not aware of this, but on next.com, you can buy Barbour, Whistles, Jigsaw, Ted Baker, Adidas, and Nike, all of these good quality brands.

'It is a really good proposition for these companies that don’t have those great online strategies themselves and it’s also another avenue to sell through.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Jack Barrat: Man GLG Undervalued Assets fund

Hunting

 

‘Oil and gas industry supplier Hunting is a company that was a huge darling for in the mid-cap space all the way through the oil boom. It was a big beneficiary of shale and cemented itself fantastically in the US onshore market.

‘However, when the price of crude collapsed by roughly 40% in mid-2014, the business fell into difficulties, with a large fixed cost base, a lot of debt and a big global infrastructure, notes Barrat.

‘Their shares fell incredibly sharply; at one point I think the shares fell by around 70%.

At the end of last year, Hunting raised capital to fix its balance sheet and now has no debt.

Nevertheless, what excites Barrat now is that despite two-thirds of the business still being loss-making, the other third is performing strongly.

‘One third’s performance is very strong. It is a business called Titan, an onshore shale business that is critical to the development of the ongoing growth of shale in the US.

‘With Hunting, you have no balance sheet risk and two-thirds of the business is still loss-making and actually, the free cash flow yield is still quite attractive, the risk/reward of that share in terms of the potential upside is absolutely huge.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Guy Feld: Marlborough UK Micro Cap Growth fund

Keywords Studios

 

‘Keywords Studios provides technical services to video game companies around the world. With offices in 18 countries, it serves 23 of the top 25 names in the business, including Sony, Electronic Arts and Ubisoft.

 ‘Services include localisation through translation and associated work, art creation, software engineering and testing. These are provided across more than 50 languages and on 16 platforms, including consoles and PC and the high growth gaming areas of mobile, social and online.

‘Our view is that Keywords is strongly positioned to benefit from the growth of the video games industry, which now generates revenues of more than $100 billion (£75 billion) a year worldwide. 

'The valuation is now pretty lofty after an exceptional run, but we believe this is a highly successful niche roll-out story and we remain positive about the company’s prospects.’

 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Michael Lindsell: Lindsell Train Japanese Equity fund

Nintendo

 

'Mario, Pokemon, Zelda and Donkey Kong are some of the most recognised cartoon characters around today.

'All have been developed and are owned by Nintendo and are at the core of video game franchises developed by the company over the last thirty years.

'It means that multiple generations of video game players are familiar with these characters and the franchises. Nintendo has sold more than 4 billion video games over that time. Nintendo uniquely believes in an integrated hardware and software business model as a way to deliver the most entertaining gameplay for consumers. There is no other company like it.

'Video gaming is a young and growing industry well known to developed market users but only just becoming familiar to the far greater numbers of emerging market consumers. Advances in technology have led to innovations in hardware platforms that have helped improve the gameplay experience over the years.

'Now with digital downloads gaming has also been brought to smartphones which has improved accessibility and for Nintendo has provided it with a huge platform to showcase its franchises to consumers all around the world. The first two Nintendo titles released on smartphones showcasing Pokemon and Mario have been downloaded 500m and 200m times respectively. That’s multiple times previous game releases.

'Add to that the success of the new Switch console – of which the company cannot currently produce enough to satisfy demand - and it seems Nintendo is now embarking on a new phase of growth.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Mike Appleby: Liontrust sustainable investment team

Kingspan Group

 

'Kingspan Group is an Irish building materials company specialising in insulation which makes up nearly 90% of sales. This company is set to benefit from retrofitting to improve the energy efficiency of existing housing stock and we see tightening regulation and increasing demand for products that help heat buildings more efficiently.

'This is part of our increasing the efficiency of energy use investment theme. Building insulation is a cost effective way of reducing wasted energy and reducing emissions as well as lowering building running costs.

'The company has excellent, proactive, operational management as evidenced by very ambitious targets to achieve “net zero energy” by 2020 (57% achieved in 2016). With single digit sales growth and double digit EPS growth supported by innovation and acquisitions in their specialised area we think this is a profitably growing business that is excellently managed and, we believe, undervalued. Kingspan remains a long-term holding in our Sustainable Future funds.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

John Malloy: RWC Global Emerging Markets fund

KAZ Minerals

 

'KAZ Minerals ($5 billion market capitalisation) is a restructuring, growth and deleveraging story. It is a copper mining company with three production units and one prospect in Kazakhstan and a minor production unit across the southern border in Kyrgyzstan.

'Two of its main assets are recently commissioned projects which are expected to deliver 80% of group production in 2019, at relatively low net cash costs – currently $0.64/lb, which is in the lowest quartile of the global cost curve.

'Formerly known as Kazakhmys, the company used to operate a power plant and several high-cost, mature copper mines of which it disposed in 2014. We invested in late 2016 with its two growth projects, Aktogay and Bozshakol set to ramp up in 2017 and 2018, leading to a 30% CAGR in copper production in three years.

'Production is ramping on time and slightly below budget. A 6x 2019 EV/EBITDA valuation target is reasonable, given that the stock is trading at 8.3x 2017 EV/EBITDA. Combined with a 20% reduction in net debt and 62% growth in EBITDA over the two years, this target multiple yields an equity valuation that is 37% above today’s price.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Thomas Fitzgerald: EdenTree Investment Management

Apple

 

'Apple reported an impressive beat and raise last month – driven by steady iPhone demand, a strong rebound in revenues from China and an acceleration in its services businesses. Most importantly, the company provided better-than-anticipated guidance for sales during the current quarter, which implies the iPhone momentum should continue through the year ahead. 

 'The continued strength of iPhone sales, alongside accelerating sales in services (+24% year-on-year on an organic basis) and wearables (+70% year-on-year) supports our view Apple has built a unique computing ecosystem, which will be difficult for competitors to replicate. This should support profitable growth over the long term.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

William Hanbury: Waverton Asia Pacific fund

China Maple Leaf

 

'Your child’s education is important to every parent. Nowhere more so than in China, where Tiger Mothers [push parent] are showing a willingness to spend heavily on private school and extra-curriculum education.

'This expenditure has grown faster than that of Chinese gross domestic product (GDP), and it is likely to continue to do so because as households get richer, they also increase the proportion of their income they spend on schooling. Households in China currently spend 2% of their income on private education, whereas in Singapore where household income is 7 times larger, they spend 4%.

 'This fast growth is accompanied by high valuations amongst the many listed companies in the Chinese education sector and we have been combing through each of these to see if we can find ones where the potential rewards more than compensate investors for the risks.

'China Maple Leaf is a standout contender: it occupies a defendable niche, running schools which specialise in preparing students to go to foreign universities; it’s valuation of 25x earnings is reasonable for a firm which has compounded its earnings at 27% since it its IPO in 2014.

'We believe the shares are trading at a significant discount due to uncertainty around an outstanding legal dispute, which even if the ruling is against the firm, costs it less than 1% of its valuation.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Richard Power: FP Octopus UK Micro Cap Growth fund

RWS Holdings

'For investors in search of growth, and a hedge against the potential of a more sluggish UK economy in 2018, the Alternative Investment (AIM) market is home to an increasing number of truly global leading companies.

'RWS Holdings is the market leader in patent translation services and has assembled an impressive list of global technology, pharmaceutical and industrial customers over the years. RWS floated on AIM in 2003 with a market value of less than £50 million. The company has grown its operating profit and dividend every year since it joined AIM, complementing its organic growth strategy with selective acquisitions. RWS is now valued at £1.2 billion and employs over 2,000 people.

 'The company has consistently upgraded earnings expectations over recent years, buoyed by the acquisitions of two life sciences translation companies; CTi and Luz.  In October RWS completed its largest acquisition to date, the $320 million (£243 million) purchase of Moravia, a fast-growing provider of technology-enabled localisation services to major US technology companies.

 'The shares have consistently traded on a premium rating and currently trade on a forward price-earnings multiple of 25x, however, the Moravia acquisition will have the impact of more than doubling pre-tax profits from £30.6 million in 2016 to a consensus forecast of £65.3 million in 2018.  Post-acquisition synergies and cross-selling opportunities also provide the prospect of further earnings upgrades still to come.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Michael Clements: OYSTER European Opportunities fund

Flow Traders

 

‘In a market where we are finding many stock valuations quite demanding, finding exposure to volatility is an interesting contrarian theme for us. Within financials, there are a number of companies that rely on volatility to drive trading volumes.

‘Dutch-based Flow Traders is an interesting play on volatility. It is a leading ETF market maker with circa 20 per cent of market share in Europe. Taking a long-term perspective, Flow Traders benefits from the structural growth in ETFs; in the short term, its revenues are largely influenced by volatility. When volatility is subdued, low trading volumes and tight spreads weigh on revenues. However, in times of stress or market dislocation, volatility provides a kicker to its structural revenue growth.

‘We believe this is an interesting way of playing volatility. As well as delivering superior returns and cash, the business is well positioned for structural growth in ETFs.

‘Earnings are currently depressed because of the lack of volatility and shares have been weak as a result, but we believe there could be a significant upside if volatility returns to more normal levels. We believe Flow Traders’ valuation is reflecting the unlikely scenario that current low levels of volatility will continue for years to come.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Andy Acker: Janus Global Life Sciences fund

Puma Biotechnology 

'Our top pick is Puma Biotechnology, an oncology focused company that received FDA approval this summer for their drug Nerlynx, indicated for the extended adjuvant treatment of early-stage, HER2-positive breast cancer.

'For patients with this aggressive type of cancer, Nerlynx was shown to lower the risk of the cancer coming back by about 33%. Our physician surveys indicate that Nerlynx could be adopted rapidly by physicians and patients, providing the potential for upside to consensus estimates.

'The outlook of Nerlynx in its initial indication, the potential for expansion into Europe and other geographies, additional ongoing trials that could lead to further label expansion, and patents that extend to 2030, we think peak sales for Nerlynx should exceed $1 billion, with an attractive margin profile.

'Given the scarcity of new blockbuster oncology launches, we feel Puma sets up well as either an independent company or a potential acquisition target.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Julian Cane: F&C Capital and Income Investment trust

Arrow Global

 

'Up to now Arrow Global has had relatively little attention from investors.  It buys debt from banks, utilities, retailers and other sectors and uses its database and process to collect outstanding monies in a far more efficient way than the creditor.  Arrow has great expertise in assessing the quantum and collection rate of the debts, and skill in pricing the initial debt acquisitions.  This is all done in a demanding regulatory environment.

'Arrow typically buys these debt portfolios for less than 10p per £1 of face value and then aims to collect around twice that amount over time.  It is a fast growing industry, as banks and other credit providers are keen to shift bad debts off their balance sheet and they don’t have the databases or skills to collect bad debts as efficiently as Arrow is able to. 

'There is industry consolidation and a handful of strong operators emerging, of which Arrow is one.  Arrow is growing fast with 36% EPS growth at its latest half year results. It has also provided very attractive returns, with 33% return on equity, and is trading at a very modest valuation of around 13 times this year’s forecast earnings.'

 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Marcus Morris-Eyton: Allianz Continental European fund

Zalando

 

'Technology is disrupting entire industries overnight and challenging many traditional investment principles. Zalando is Europe’s largest online fashion retailer, offering customers access to over 1,500 brands. The company benefits from strong network effects, as higher website traffic (200 million visits per month) helps attract more brands, which in turn improves the customer experience, driving higher traffic.

'The online fashion market is growing at 9% a year, and Zalando still represent less than 1.5% of the European fashion market, providing significant growth opportunities. Zalando have invested heavily in their technology platform and distribution capabilities (e.g. same day delivery) to use their strong growth, and first mover advantage to establish significant barriers to entry.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Simon Finch: Ashburton India Equity fund

Capital First

 

'Capital First is one of our preferred non-banking financial corporations held in the fund, specialising in providing credit to the under-served micro, small and medium enterprises (MSMEs), as well as consumers across India. We first met with the company just over three years ago, and were impressed by the turnaround story and proprietary software which keeps lending focused and risk aware, giving them an edge over the competition.

'The company has recently recorded its five millionth customer, a staggering achievement, whilst its market cap has grown by more than 10 times since the new management team came on board.  In addition, we have been mightily impressed by the improved credit rating going from A+ to AAA in just seven years, which brings down its cost of financing.  The demand from Indian consumers to borrow has been growing exponentially, with borrowers using the funds to purchase a motorbike, or white goods.  This will be an ongoing trend as we see Indian consumers shifting from rural lifestyles to urban living. 

'Capital First is well-positioned to meet the growing needs of India’s rapidly changing economy and society, particularly as the pace of urbanisation quickens and disposable income increases considerably in the coming years.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Jack Barrat
Jack Barrat
10/153 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 45.77%
Andy Acker
Andy Acker
10/21 in Equity - Pharmaceuticals & Health Care (Performance over 3 years) Average Total Return: 28.20%
Blake Hutchins
Blake Hutchins
467/593 in Equity - Global (Performance over 1 year) Average Total Return: 10.74%
Neil Veitch
Neil Veitch
235/435 in Equity - Global (Performance over 3 years) Average Total Return: 40.10%
Richard Power
Richard Power
30/47 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 49.22%
Guy Feld
Guy Feld
21/47 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 58.41%
Michael Lindsell
Michael Lindsell
3/85 in Equity - Japan (Performance over 3 years) Average Total Return: 105.79%
Simon Finch
Simon Finch
26/38 in Equity - India (Performance over 3 years) Average Total Return: 42.81%
John Malloy
John Malloy
67/286 in Equity - Global Emerging Markets (Performance over 1 year) Average Total Return: 26.35%
Marcus Morris-Eyton
Marcus Morris-Eyton
55/121 in Equity - Europe Excluding UK (Performance over 3 months) Average Total Return: -0.22%
Michael Clements
Michael Clements
7/80 in Equity - Europe Excluding UK (Performance over 3 years) Average Total Return: 59.82%
William Hanbury
William Hanbury
100/167 in Equity - Asia Pacific Excluding Japan (Performance over 1 year) Average Total Return: 19.80%
Citywire TV
Play French fund CEOs: 'Brexit is a lose-lose situation for all of us'

French fund CEOs: 'Brexit is a lose-lose situation for all of us'

'We'll all lose out - but London is an international city, Paris is not.' Leading French asset management CEOs tell us what they think Brexit will mean for the investment business.

Play Henderson Eurotrust's Stevenson: dealing with European cynicism

Henderson Eurotrust's Stevenson: dealing with European cynicism

Tim Stevenson talks about where he finds his opportunities in the current environment in Europe

Play Mark Barnett - part 2: why I'm not buying Lloyds

Mark Barnett - part 2: why I'm not buying Lloyds

In the second part of our exclusive video interview, Barnett explains why he has no intention of buying Lloyds, and where he sees the greatest income opportunities.

Read More
Wealth Manager on Twitter