A LOW-PROFILE commercial laboratory specialist has emerged as the company most admired by Australia's top fund managers and equity analysts.
In a year with relatively few stockmarket winners, the Brisbane company Campbell Brothers became the must-own stock for fund managers, according to the latest annual East Coles survey of fund managers.
Campbell performed strongly across nearly 20 different categories that stockmarket professionals look for to help them make a decision about investing in a company.
This includes whether a company is focused on shareholder value; its growth prospects; earnings quality; and how it manages capital. The rankings also take into account whether it has a sustainable competitive advantage.
The East Coles survey, published exclusively in BusinessDay, is based on interviews from analysts across the six of the nation's biggest institutional brokerages and 17 of the largest fund managers which collectively oversee investments in Australian equities running into the hundreds of billions of dollars.
Those that backed Campbell Brothers were not disappointed. Its shares were up almost 22 per cent over the past year, compared to a 15 per cent fall in the broader market.
Second placed in the East Coles survey was the health care products company CSL, the former Commonwealth government-owned business that is now a global leader in blood plasma processing. While CSL's shares were down 11 per cent through the year, it performed strongly in areas such as capital management, growth prospects and operational management.
CSL was one of the three health-linked companies that made up the top 10 of favoured stocks. The dominance of the sector was remarkable given its relatively small size compared to resources and financial stocks. Other strong health performers were hospital operator Ramsay Health Care which came in at fourth spot, while the bionic ear manufacturer Cochlear came in at eighth spot.
Commonwealth Bank was the only financial services company in the top 10 as the favoured stock among fund managers and analysts, capping off a year where it delivered a record $6.8 billion profit. CBA performed well when it came to a focus on shareholder value, earnings quality and capital management.
Among energy and resource stocks, Origin Energy was the top performer, coming in as the third most favoured stock overall. Even with poor performance on the stockmarket over the past year with its shares down more than 17 per cent, Origin ranked highly on measures such as a strong board, operational management and an effective chief executive.
BHP Billiton, a favourite blue chip with fund managers, was the only pure mining company in the top 10. Overall BHP came in at seventh place, performing well on attributes such as risk management, a sustainable competitive advantage and earnings quality.
Beverage group Coca-Cola Amatil was fifth overall, outperforming most companies when it came to shareholder focus and clarity of strategy. Coca-Cola Amatil also performed well on market credibility - that is whether investors believes the company can deliver what it promises.
A separate ranking by East Coles of the most "effective chief executives" largely tracked the overall best performers, with Campbell's Greg Kilmister also coming in first spot.
He was followed by CSL's Brian McNamee and Origin Energy's long-serving chief executive, Grant King. Interestingly, none of the big bank chief executives made the top 10, even though they each rank as the highest paid among Australia's corporate bosses.
Other notable chief executive outperformers were David Robb of Iluka Resources and Coca-Cola Amatil's Terry Davis, who were ranked fourth and fifth respectively. Frank O'Halloran of QBE was the only financial services company chief executive to make the top 10 in the chief executive rankings, coming in at seventh place.