The year’s greatest event for stock pickers is just two weeks away.
You might be asking why we are starting this story with something that reads like an advertisement.
I asked myself that, but, when you look at the 42 per cent gain you would have got if you acted on the advice at the Sohn Hearts & Minds Investment Leaders Conference (or in the article that detailed the stock picks in The Australian Financial Review), it’s hard to argue otherwise.
In previous years, the tips revealed at the annual conference have uncovered gems including NextDC, JB Hi-Fi and Mineral Resources. Last year, there were some well-known companies among the 11 picked, such as Airbus. But there were also lesser-known names like Tencent Music (China’s version of Spotify), Blackline (a Nasdaq-listed back office software company) and Cellnex (a Spanish telco infrastructure company).
If you bought them all, the 42 per cent baseline return over the past year is more than four times the 9 per cent gain in the ASX 200 and not far off double the Nasdaq’s 23 per cent jump and the S&P 500’s 24 per cent climb. It’s even ahead of the 31 per cent increase in an equal-weighted index of the much vaunted magnificent seven tech stocks.
Only gold’s 56 per cent jump over the same period puts it in the shade. Although our index doesn’t capture the dividends that some of the 11 companies paid and gold famously pays zero dividends. If you add the $2150 you got in dividends from holding the Sohn 11, your total return climbs to 44 per cent.
The performance is also significantly better than the 7.9 per cent rise in the HM1 listed investment company – Hearts & Minds Investments. That’s because HM1 puts only 35 per cent of its portfolio into the picks from the conference. The balance of 65 per cent goes into the three “highest conviction investment ideas” from the managers of the fund, which include Caledonia, Magellan, Munro, Prusik and TDM Growth.
Last year, it seems, was a year for listening to the conference picks rather than those managers.
“One of the first rules of investing is also the first rule of fishing: you go fish where there are fish,” says John Birkhold, the former managing director of Credit Suisse HOLT in Australia and now the chief investment officer at TWC Invest. “They have already looked through a large number of stocks and winnowed it down to what they think are attractive names, and that’s very helpful.”
The picks that are made at the conference aren’t the kind of stock picks you’d find in a typical investment sheet. They aren’t made for day trading. No one is there trying to pump and dump.
They are designed to showcase the expertise of the active fund managers that make them, and contribute to the philanthropic effort of the Sohn conference.
Sohn isn’t just about investment – it was set up to raise funds for medical research and has donated over $83 million to more than 30 research organisations since the Australian version started in 2016. That makes the conference and its associated listed investment company one of Australia’s biggest corporate philanthropists. But along the way, it has given some great stock picks.
So let’s look at how we tracked the winners and losers from last year to get ready for November 14 in Sydney.
How our DIY ETF of the Sohn picks was structured and why
We started by making an equal-weighted index of the stocks, meaning a hypothetical $10,000 was allocated to each pick on November 18, 2025, the first trading day after the conference.
Many of the stocks are not sold locally so we converted the closing share price into the Australian dollar equivalent and virtually bought whatever whole number of shares was closest to $10,000 in each stock. That gave a hypothetical investment of an unhedged $109,859.50, not including transaction costs.
As of October 24, that total investment was worth a virtual $156,199.60, a gain of 42 per cent. Including dividends, it was worth $158,348.96.
Importantly, Birkhold says it would be unusual for a professional active fund manager to take such an equal-weighted approach to the picks because a professional would seek to determine whether some were more speculative than others and so deserve a smaller share in a balanced portfolio because they were higher risk.
But from a retail investor’s perspective, we took the view that we would not second guess the professionals and take them on their convictions. In a bull market, that worked, but it might not in other market conditions. The portfolio also included no short picks (by that we mean stocks that the fund manager expected to fall). We will come back to that later.
Coeur Mining leads the pack for Jeremy Bond and Terra
The standout performer in our DIY (un)exchange-traded fund was Coeur Mining, a US-based precious metal producer with five mines in the Americas.
It rose 185 per cent after being recommended by Jeremy Bond, the founder and chief investment officer at resource-focused fund Terra Capital.
“When you go to pitch at something like Sohn, it’s got to be a company that you really believe in – more than likely it will be one you own. And it’s got to be a certain size and a certain liquidity for the Sohn fund to be able to invest in it,” Bond says in an interview before heading off to pitch his fund in the UK.
Terra already had a strong view that silver would follow gold higher last year, and determine that Coeur was undervalued after it had some teething problems at a new mine.
“It was commodity investor’s dream. When you see a company’s operations really rapidly expanding, cash flows going up, commodity prices going up, leverage coming down – they’re usually pretty good ingredients for a successful investment into a mining company … It’s done what we hoped it was going to do. It’s nice when the thesis works.”
But you won’t get a pick from Bond this year because he will be on a roadshow for his fund.
Although if you are interested, he recommends Canadian-listed G Mining in gold stock to hold. In copper, he sees more “torque” from developers such as Faraday Copper in the US.
In critical minerals, he likes Guardian Metals, a tungsten producer that is UK-listed but moving to the Nasdaq. And locally, Terra Capital recently bought into GBM Resources, a Queensland-based exploration company.
The next two top performers were Tencent Music (up 109 per cent), picked by Samir Mehta of JO Hambro, and Airbus (up 64 per cent), chosen by Vihari Ross at Antipodes.
Mehta chose Tencent Music after narrowing it down from a pool of companies he looked at that had high or rising returns on capital, margins, sales growth or cash flow.
“For Tencent Music, I certainly got lucky,” Mehta emailed from Singapore. “They met all the criteria, but most importantly, management have executed way better than my expectations. They are the Spotify equivalent for China.”
He says the cash the company throws out is only likely to grow, but concedes he was also helped by an external factor: “The icing on the cake was that China is back in favour.”
Just as in life, there is always an element of luck in successful stock picking. He is forbidden from revealing what he will pick this year when he comes to Sydney “but there are a few similarities to last year’s pick – an asset-light business generating strong cash flows with a long runway for growth in a country that is out of favour”.
As far as Airbus goes, it was helped by the popularity of its planes – particularly the narrow body A321 neo – as airlines rushed to bring capacity back after the closures of the pandemic.
If you had bought just those three stocks you would have had growth of almost 120 per cent.
The bottom performers on the list are Perpetual, picked by Chris Kourtis at Ellerston Capital, BlackLine, chosen by Scalar Gauge Fund’s Sumit Gautam, Eli Lilly, named by Loftus Peak’s Alex Pollak, and Cellnex, picked by Ricky Sandler at Eminence Capital.
Kourtis picked Perpetual as a potential turnaround story when its plan to sell its wealth unit to buyout giant KKR for $1.4 billion was still a going concern.
But that deal was abandoned after the financial services giant was handed a tax bill of almost five times its initial estimate and the stock has languished since.
Talks to sell the unit to Oaktree Capital Management-backed financial planner roll-up AZ Next Generation Advisory have dragged on for more than 150 days, Street Talk reported last week.
Analysts had expected Perpetual to use the wealth sale proceeds to reduce debt levels. But if Perpetual can’t sell the division, there are concerns the board will be forced to raise up to $600 million in equity or slash dividends.
Gautam had predicted Nasdaq-listed BlackLine’s shares would rise by 85 per cent thanks to demand for its back-office software. But its sales missed expectations in August, leading to a steep drop in its share price.
Still, of the 14 analyst ratings compiled by Bloomberg, six are buys and seven are holds. There is one sell rating.
Now, back to the shorts. No one at the 2024 Sohn conference picked a stock to short. That turned out to be a great call in a bull market, says Birkhold.
But with valuations looking much more frothy now, he says he will be watching for short picks this year.
“What I would be interested in seeing this year is to what extent there’s anybody brave enough to put out short ideas. It’s a target-rich environment for short ideas,” Birkhold says.
“But shorting is difficult. It’s difficult to execute because you have to borrow the stock, you have to then sell it, and then you have to not get squeezed out of it. And that is the challenge.”
He says that could be appropriate because “we have entered that era of meme stock rampant speculation … Now might be the time to step back with the bulk of your portfolio and make sure you’re OK. Because these things are great while they last, but typically air pocket down if there’s no underlying fundamentals.”
This article was originally posted by The Australian Financial Review here.
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