I'm always interested in learning what fund managers think are worth buying, particularly ones that have a history of outperforming the market or their peers.
Carlton Investments Limited (ASX: CIN) has returned an average of 13.4% per annum over the last five years. This performance is better than most of its peers which focus on large caps and it could be on track for further outperformance because of one key investment.
It's rare for a fund manager to have one share that makes up more than 10% of their portfolio. If they do hold more than 10% it's a sign of very high conviction in that business.
In its update for 30 September 2017 Carlton revealed that 41% of its portfolio is invested in Event Hospitality and Entertainment Ltd (ASX: EVT).
Event operates cinemas, hotels and resorts in Australia, Fiji, New Zealand and Germany.
The share price has almost doubled over the last five years, growing from $6.77 to today's $13.02. This growth has been somewhat validated by the earnings per share growing from 50.1 cents in FY12 to 68.7 cents In FY17.
The main reason that Event could be a market-beating idea is that leisure spending is expected to increase over the coming years with both more people reaching retirement age and increasing amounts of tourists visiting Australia who will probably use Event's hotels and resorts.
Foolish takeaway
Event is trading at 17x FY18's estimated earnings with a grossed-up dividend yield of 5.6%. If I wanted to get exposure to Event then I'd consider investing in Carlton because it has such a large exposure, but also has a good grossed-up dividend yield of 5%.
