Fundies' most-tipped stock picks 2021: First-half leaderboard

We're at the halfway mark now, folks. The end of financial year has come and gone and I'm excited to see where our fundies have landed. For our Aussie-listed stocks, we're just ahead of the August reporting season, but there were still a few meaty updates on some of the picks. 

At face value, you would think the extended pandemic recovery, new COVID lockdowns and a delayed vaccine rollout would be tough on companies, but the theme from our fundies seems to be: look through the pandemic. 

And so, our fundies are largely optimistic about the future of their mock-portfolio. Certainly, they have tracked well against the readers' picks, as we reveal later in this article. 

Previous coverage on 2021 fundies top picks: 

Equities

Which fundies are leading the pack for the top stock-picker prize?

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Equities

The #1 stock picks for 2021

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Here are the fundies in the race at 1H21: 

• Ben Clark, TMS Capital
• David Allingham, Eley Griffiths
• Vihari Ross, Magellan Financial Group
• Kelli Meagher, Sage Capital
• Adam Lund, Spheria Asset Management
• Chris Demasi, Montaka Global Investments
• Tom Richardson, Paradice Investment Management
• Olivia Salmon, Lennox Capital
• Dr Bianca Ogden, Platinum Asset Management
• Matthew Kidman, Centennial Asset Management

The ASX200 has had an absolute cracking 1H21, returning 8.9% YTD. On a financial year basis, FY21 has had the best returns since 1987, sitting at a 24% return.

For this exercise, each of our fundies was allocated a hypothetical $1,000 - meaning we have a starting fund of $10,000 for the mock-portfolio we've tracked using Sharesight. Source: Sharesight/Livewire Markets. 

Our fundies' stock picks returned an average of 59% over 2019, and even during the market downturn of 2020, they hit an average of 13.88%. This year is looking much more promising with a 1H21 average return of 25.72% for the portfolio. 

We're all really here to cheer on our favourites fundies anyway. So, let's see how they've fared at the 1H (six-month) checkpoint, what's changed about these stock picks and what lies ahead.

Galaxy Resources (ASX: GXY) and Pilbara Materials (ASX: PLS)

Tom Richardson, Paradice Investment Management
Performance 1H21: ASX: PLS +66.63; ASX:GXY +64.57%

The new numero uno is Tom Richardson from Paradice with first and second place on the leaderboard. What a knockout with mid-60% returns, a full ten percentage points in the lead. 

These mining stocks are underpinned by strong demand for lithium. Galaxy Resources, especially, entered into a binding merger agreement with Orocobre. This merger will make the company the 5th largest lithium chemicals company in the world. 

We spoke last quarter about the incredible electric vehicle (EV) thematic that is accelerating EV demand and Richardson said EVs are becoming a more powerful force. Economically and, in this case, literally: 

I'm sorry. But this is really cool. Source: YouTube/Unbox Therapy.

This isn't a gratuitous plug for the Ford. Instead, Richardson spoke about the F-150 launch as one of the biggest indicators that EVs are about to really take off in the US. 

"Probably the biggest thing this quarter was Ford launched the F-150, The Lightning, which is its electric vehicle. The Ford F-series is the largest selling gasoline vehicle in the US. They sell about a million units a year. (Ford) launched an EV about six weeks ago and it was met with a lot of excitement," he said. 

Previously, much of the EV demand was centred on Europe and China, which both have favourable EV and climate target policies. Opening up the US market is going to be a big deal. 

Tyro Payments (ASX: TYR)

Ben Clark, TMS Capital
Performance: ASX: TYR +15.36%

Clark's place on the leaderboard is steady this quarter, and there are some more promising signs on the horizon. 

Tyro took a hit from an outage in January this year and is taking another hit from lockdowns with its customer base skewed towards hospitality. But this stock seems to take the hits and keep on comin'. 

The first half of 2021, Tyro rolled out its partnership with Bendigo Bank, which sees Tyro's technology deployed to Bendigo Bank merchants. 

"The technology is superior to most of the other payment hardware that is out there. Banks have underinvested in these areas for years now, except for CBA. And so, you know that there's a real leap between a Tyro terminal and the status quo in the Australian market," said Clark. 

"And yes, it's much more cost-effective to merchants as well so it's a win-win," he said. 

Clark believes stockholders are happy to wait out short-term disruptions like lockdown because they understand the long game with Tyro and its competitive place in the market. The possibility of further bank partnerships to upgrade outdated merchant technology is not out of the question for Tyro. 

Downer Group (ASX: DOW)

Matthew Kidman, Centennial Asset Management
Performance: ASX:DOW +6.57%

A much stronger quarter has seen Matt Kidman climb the leaderboard this time, placing above Intercontinental Exchange (ICE) and Cytomx. Downer is in the process of restructuring the business and offloading a lot of the capital intensive assets.

"They're shrinking the business to greatness," said Kidman about Downer Group. 

"They're doing it to get higher returns, and deliver the money back on the lower return businesses by selling them and delivering those returns back to shareholders which I kind of like," he said

"So, under that scenario, you get a higher multiple. The strategy is working out but the market hasn't warmed to it."

As a business, Kidman said Downer is exactly where it needs to be, but the market just isn't "warming up" to the idea yet -- possibly waiting on the August earnings report to come through before making a move. 

The leaderboard

Here's an overview of how each stock performed at 1H21. 

*Mortgage Choice is no longer listed on the ASX. Source: Sharesight/Livewire Markets. 

Other updates: 

As of 1 July, Mortgage Choice has been acquired by REA Group and the MOC listing is no more. We've kept this fundie, Adam Lund, on the board for this final round.  We had flagged the upcoming takeover last quarter and the stock has not been trading for most of this quarter. 

The one negative return, Cytomx Therapeutics, after missing revenue targets by about 20%. The self-described "clinical-stage oncology-focused biopharmaceutical company" took a turn after the US reporting season in May. Unfortunately, we weren't able to speak with Dr Ogden on the outlook for the stock in time. 

Fundies versus the readers ...

Last year, we also surveyed our readers for their stock picks and we've created a mock portfolio to rival the experts. You can see how the Readers' Picks performed from my colleagues:

Once again, we've put together a cheeky snapshot of our Fundies vs Readers. At this point, it's starting to make me think we should leave the stock-picking to the professionals - look at them go! 

Source: Sharesight/Livewire Markets. 

Which stocks are you backing in 2021? Tell us in the comments below.

Give us your hot tips or tell us which stocks you would ditch. There are still six more months to go... 

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