9 growth and defensive stock picks from 3 market-beating fundies

As global markets navigate an uncertain future, investors face a pivotal challenge. Should they chase the winners of the past decade, or seek new opportunities in undervalued or defensive sectors? 

While some believe AI-driven innovation will continue to dominate, others argue that infrastructure investments and the occasional shorting opportunity will drive returns.

At the 2025 Pinnacle Insights Series, three fund managers shared their playbooks, covering long-short strategies, high-growth investing and real assets, each offering distinct ways to identify tomorrow’s winners.

While their styles differ, all three managers have added alpha and beaten their benchmarks since inception—and each has a few key stocks they believe in right now.

Plato Investment Management: Dr David Allen 

The quote: “We don’t take big, risky bets - we aim for consistent alpha. Just like Don Bradman didn’t hit sixes, we focus on getting the singles right.”

Plato’s strategy is built on risk-adjusted returns and a 150/50 long-short structure that allows them to take advantage of both long and short opportunities. 

Since inception, the Plato Global Alpha Fund Active ETF (ASX: PGA1) has delivered an annualised 24.1% return (compared to 12.9% for the MSCI World since September 2021), with 70% of alpha generated from its short book.

Allen’s key stock picks:

• JP Morgan (NYSE: JPM) – “Arguably the best-run bank in the world, trading at 13x earnings, compared to CBA at 26x.”
• Palantir (NYSE: PLTR) – “At the epicenter of three mega trends—government efficiency, AI, and defense contracting. We bought in three years ago, and it’s up 380% since.”
• Rolls-Royce (LON: RR) – “A defensive play with strong tailwinds. 25% of their business is in defense, which benefits from global rearmament trends.”

Plato’s “red flag” system, with 150+ warning indicators, helps them avoid companies at risk of fraud, financial distress, or mismanagement. One example is Liontown (ASX: LTR), where insiders sold millions in stock before bad news hit, leading to a 25% decline.

Final thought from Allen: "When we detect red flags, we find on average that company will underperform the market by about 20% over the next 12 months. It's a system that's great for not only finding shorts but capital preservation. 

"Warren Buffett was very fond of saying that there’s only two things you need to know on investing: rule number one don’t lose money, rule number two don’t forget rule number one."

ETF

Plato Global Alpha Complex ETF (PGA1)

Global Shares

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Hyperion Asset Management: Jolon Knight

The quote: “Markets have always been concentrated. You win by owning the few companies that dominate.”

Hyperion takes a high-conviction approach, investing in only 23 stocks but ensuring 60-65% of their portfolio is allocated to their top 10 positions. Knight argues that diversification into too many names dilutes alpha, and that market leadership follows a power law—where a few companies drive most returns.

Since inception in June 2014, the Hyperion Global Growth Companies Active ETF (ASX: HYGG) has returned 20.3% per annum, versus 14.3% for the MSCI World.

Key Stock Picks:

• Palantir (NYSE: PLTR) – “We’ve owned it for years, and it’s up 8-10x since we bought in.”
• Spotify (NYSE: SPOT) – “Turned from break-even to profitability, and we’ve seen a 3-4x return on our position over five years."
• Tesla (NASDAQ: TSLA) – “We use a ‘top and tailing’ strategy—adding when the stock dips and trimming when it rallies, which has generated 31% alpha since we bought in.”

Knight sees AI and machine learning as the most important investment theme of the next decade. However, rather than chasing new entrants, Hyperion prefers companies already positioned in AI, such as ASML, Block, Meta, and cloud service providers.

Hyperion’s edge comes from earnings growth rather than valuation metrics. Their portfolio EPS growth has averaged 21% per annum, versus just 9% for the MSCI World Index.

Final thought from Knight: “If you want to outperform, own the disruptors early and hold them through cycles.”

"Valuations have always looked high if you only focus on near-term multiples, but the best businesses justify them through long-term earnings growth."

Managed Fund

Hyperion Global Growth Companies Fund (Managed Fund)

Global Shares

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Resolution Capital: Sarah Lau 

The quote: “Nuclear is the only clean energy source that can provide consistent, 24/7 baseload power—making it the perfect match for AI-driven electricity demand.

Resolution Capital’s global listed infrastructure strategy focuses on long-term secular growth trends, including energy transition, mobility, and energy security. Lau highlights nuclear power as a key investment theme, driven by increasing electricity demand from AI, data centres, and manufacturing.

Since inception in September 2021, the Resolution Capital Global Listed Infrastructure Fund has returned 7.23% per annum, versus 4.98% for the index.

Key Stock Picks:

• Southern Company (NYSE: SO) – “A monopoly utility in the U.S. Southeast that completed major nuclear expansion projects and is now benefiting from soaring data centre demand.”
• Constellation Energy (NASDAQ: CEG) - “Owns a quarter of the U.S. nuclear fleet and has secured long-term, high-priced contracts with Microsoft, ensuring strong cash flows.”
• Kinder Morgan (NYSE: KMI) – “A leading U.S. natural gas pipeline company benefiting from rising LNG exports and increased industrial demand.”

Lau emphasises that listed infrastructure remains undervalued relative to unlisted markets, despite offering superior growth potential. She sees electric utilities, pipelines, and renewables as prime beneficiaries of the structural shift toward higher electricity demand and energy security.

Final thought from Lau: "We see a disconnect between public and private markets - listed infrastructure assets are trading at significant discounts to their unlisted counterparts."

"Transactions in the unlisted infrastructure space continue to happen at a premium compared to listed markets, which presents an opportunity for investors."

Managed Fund

Resolution Capital Global Listed Infrastructure Fund

Global Shares

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