Keeping an eye on what other investors do can be rewarding – just ask some of the savvy investors who bought shares in Berkshire Hathaway Inc (NYSE: BRK.A) many years ago when Warren Buffett started purchasing stock in the then textile mill!
In a more modern context, reviewing the stock holdings of investors or funds known to have outperformed the market over a long period of time can also yield profitable investment candidates. Two funds which are managed by listed stock broker Wilson HTM Investment Group Ltd. (ASX: WIG) are the Priority Core Fund and Priority Growth Fund. Both are approaching track records of nine and four years respectively with solid outperformance against their respective benchmarks.
While simply reviewing a portfolio can generate ideas, even better is gaining insights into the entry price that outperforming investors have purchased stocks in their portfolio at. According to the February updates for the Core and Growth Funds, purchases of the following five stocks were made during the month: Emerchants Ltd (ASX: EML), Aurizon Holdings Ltd (ASX: AZJ), Mastermyne Group Limited (ASX: MYE), Nine Entertainment Co Holdings Ltd (ASX: NEC) and Silver Chef Limited (ASX: SIV).
The timing of these purchases – with the exception of Mastermyne – appears well timed, with the share prices trending higher over February and into March, in most cases it is likely that the portfolio managers would still see value at today's prices.
Emerchants would also appear to have the most enticing growth profile of the five stocks, with the company still potentially in the early stages of gaining acceptance from clients for its pre-paid card offerings.
Foolish takeaway
While another investor's portfolio holdings should generally only be viewed as a starting point for idea generation, the above five stocks certainly have some appealing attributes and could all be worthy of further research by investors.
