Key stock picks 2020 – Half time score…
Zach Riaz
Banyantree Investment Group
At the start of each year our team publishes a list of stocks (no more than 10) which we believe are likely to outperform the market over the coming 12 months. These ideas are generated from our research program, which covers bottom up stock analysis and macro analysis. That is, we could be playing a macro theme or a stock specific catalyst. Our research program drives ideas for our portfolios.
If you go through our key picks list for 2020 and past 3 years (provided below), you may find one or two names which you may not be so familiar with. But, by and large, most of the stocks are well known, liquid (predominantly S&P/ASX 200), and come from a range of sectors.
As a basket, our key picks have outperformed the broader market for the past three years and 2020 picks are well ahead, so far. But that is not the most important part. Our goal as investment managers is to hit 50 – 70% win rate on a consistent basis. What constitutes a win? Positive return or at least better than the market. On this basis we are hitting our target. If we do this, the performance of our portfolios over the long-term will take care of itself. Year-to-date CY20 (Jun-20), our Australia large cap, Australian Small Cap and Global Core strategies are well head of their reference benchmarks. Since inception, all these strategies are also outperforming.
There are simple but very important reminders from this annual exercise:
- You do not need to get overly creative with your stock picks to deliver consistent performance. We aim to deliver 8 – 12% p.a. through the cycle and therefore we are not chasing “10 baggers”. Often the best plays are the ones in plain sight.
- Valuation is one part of the overall analytical framework. If we knocked out companies on a simple “high PE-multiple” measure at the screening level, we would have missed out on a2 Milk Co (A2M) and Afterpay (APT) – both of which have been or still part of our portfolios.
- Don’t follow a style (value, growth, momentum, quality) and assess each stock idea on its own merits. We went long Nine Entertainment at 9x PE-multiple and Afterpay at 83x PE-multiple. Trust your research and investment process. What gave us confidence investing in these stocks at the time was our “on the ground” research, not just spread sheet work.
Performance from the day the list was published to the end of the respective year (source: Bloomberg)
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Investment Manager and Director at Banyantree Investment Group, with responsibilities across equity and multi-asset strategies. Zach has over twelve years’ experience including portfolio management and sell-side investment research.
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PLEASE NOTE - The content above is general in terms and does not take into account your objectives, financial situation or needs. You should always consider your unique personal circumstances and seek professional paid advice before making investment decisions. Past Performance is not an indication of future outcomes.
Disclaimer
This document is provided by Banyantree Investment Group (ACN 611 390 615; AFSL 486279) (“Banyantree”).
The material in this document may contain general advice or recommendations which, while believed to be accurate at the time of publication, are not appropriate for all persons or accounts. This document does not purport to contain all the information that a prospective investor may require. The material contained in this document does not take into consideration an investor’s objectives, financial situation or needs. Before acting on the advice, investors should consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation and needs. The material contained in this document is for sales purposes. The material contained in this document is for information purposes only and is not an offer, solicitation or recommendation with respect to the subscription for, purchase or sale of securities or financial products and neither or anything in it shall form the basis of any contract or commitment. This document should not be regarded by recipients as a substitute for the exercise of their own judgement and recipients should seek independent advice.
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Zach Riaz
Investment Manager / Director
Banyantree Investment Group
Investment Manager and Director at Banyantree Investment Group, with responsibilities across equity and multi-asset strategies. Zach has over twelve years’ experience including portfolio management and sell-side investment research.
Expertise
Zach Riaz
Investment Manager / Director
Banyantree Investment Group
Investment Manager and Director at Banyantree Investment Group, with responsibilities across equity and multi-asset strategies. Zach has over twelve years’ experience including portfolio management and sell-side investment research.
Expertise
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