On a stock-picking basis one of Australia's better performing fund managers over the last few years has been Perpetual Limited (ASX: PPT).
The fund manager traditionally has a heavy weighting towards the management of Australian equities, but is seeking to move into the global space with the launch of a new Perpetual Global Share Fund and its first listed investment company the Perpetual Equity Investment Company Limited (PIC) (ASX: PIC).
The PIC fund is intended to have a mid-cap focus on Australian equities with a smattering of the best global ideas Perpetual's equity research function generates. It's true that many Australians with self-managed superannuation funds have too much exposure to the big miners and banks, so the idea of the PIC is to give investors more exposure to the Australian mid-cap and global sectors.
With regard it may be worth taking a look at some mid-cap stocks the Perpetual Group has been buying recently and how they may fit into its stock-picking principles of buying companies that offer strong management, recurring earnings, conservative debt, excellent value and decent outlooks.
Sound management
Auto parts dealer and distributor Burson Group Ltd (ASX: BAP) looks a big favourite of the Perpetual stock-picking team with the business increasing its holding in Burson to a not insubstantial 14.80% as at October 8. Burson is conservatively managed and has a long organic and acquisitive growth runway ahead of it. Unsurprisingly, it looks a Perpetual favourite.
The value play
On October 6 Perpetual increased its holding in electronic goods retailer JB Hi-Fi Limited (ASX: JBH) to 5.30%. With the stock off almost 30% over the past six months it looks an opportunity for bargain hunters given JB Hi-Fi's growth plans in the white goods market.
The new HOME format stores are central to the plans for a lucrative push into the market for higher-value goods such as fridges, dishwashers and cooking appliances. This move is being made while JB Hi-Fi continues to deliver on its core strength of selling smaller electronic appliances such as TVs, cameras and personal computers. Trading for $14.56 it looks a strong opportunity.
Conservative debt
On October 3 Perpetual registered a substantial holding in Graincorp Ltd (ASX: GNC). As an agricultural business earnings can be at the mercy of the weather, although with a strong balance sheet and core gearing of 19% the group is well positioned to capitalise on the attractive grain industry fundamentals of growing production and strong demand.
Improving outlook
On October 7 Perpetual increased its holding in BlueScope Steel Limited (ASX: BSL) to 7.44%. At $5.07 BlueScope is trading substantially below the reported price ratings of several investment houses including Deutsche Bank and Citigroup. After a lean few years BlueScope may be offering value to smart investors.
