MoneyWeek’s top ten tipsters of 2005

Over the past 12 months, nearly 40 fund managers have been kind enough to write about their personal views on investments and how MoneyWeek readers could profit from them.

And while the FTSE may have had a good year it's up 15% since January some of our tipsters have trounced that, with our number one managing an astounding 62.9% return since April. Here we look at who's done best over the year.

This is not an easy thing to judge. As most of the tips were intended as long-term investments, judging them at a random moment less than 12 months later is hardly fair. And as they were all made at different times some in January, some just last week the timeframe on which we are calculating the performance varies in each case. Nor are dividends payouts included, which isn't strictly fair either. But fair or not, here we look at our top ten tipsters (in terms of percentage gains) and at what they will be investing in for 2006.

1. Richard Tonkinson - Williams de Broe

In April, Tonkinson suggested it might be worth looking at three resource shares to play the commodities bull. They have paid off handsomely, bringing in a combined increase of 62.9%. He chose Uruguay Mineral Exploration (+2.63%), Heritage Oil Corp (+160%) and Giralia Resources (+26.2%). As Heritage has risen so much (it is well over double its price nine months ago), he would now recommend taking any profits and buying into Egdon Resources (EDR, 99p) instead. He would also sell Giralia, switching into Forum Development Corp (FDC.V, C$0.39). But Uruguay (UGY, 236p) is still a buy, and could see "very significant" upside from here.

2. Natasha Chetwynd - Britannic Asset Management

In February, Chetwynd, who is the head of Japanese equities, chose Japan's largest bank, Mizuho Holdings (+85%), as her first tip. She also suggested Mitsui-Sumitomo Insurance (+60%), another Japanese financial sector stock, and Murata (+18%), one of Japan's top makers of electronic components. Overall, her tips were up by 54.4%, an extremely impressive gain, even next to the stellar performance of the market as a whole (the Nikkei is up 37% since January). She "remains happy" to hold the shares into 2006, but her new favourite stock is Sumitomo Mitsui Financial Group (8316, 1,240,000). Also in Japan, she likes both Hikari Tsushin (9435, 9,400) and Fujitsu (6702, 843).

3. Marina Bond - Rathbone Smaller Companies fund

At the beginning of June, Bond tipped four stocks that have returned an overall rise of nearly 32%. One, Visual Defence (VDI, 26p), has done very badly (47.5%), but she still sees it as a long-term play, and her other tips more than made up for it anyway. Carter & Carter (CART, 435p) "has delivered on all promises to date", she says. Although it is up an impressive 20%, she still "supports the stock at these levels". Another tip, Goals Soccer (GOAL, 165p), is up over 34% and she would recommend holding for the longer term, "despite the strong run in the price".

But by far Bond's most successful tip, which has more than doubled since June (up 119%), is Crosby Capital Partners (CSB, 85p). She originally picked it because it hadn't "yet reached people's radar screens". Although it now has, it is still an "attractive stock" as long as the Asian markets continue to show strength. For 2006, she is tipping British Biocell International (BBI, 95p), which develops diagnostic tests for hospitals, and which could see a boost from its flu-testing kit this winter. It is also looking to rolling out its diabetes product in the US with other promising projects in the pipeline. "This little firm is profitable, cash generative and well run," she says. It is still too small to have grabbed investors' attention yet, making now a good time to buy.

4. Jim Mellon - Regent Pacific

In May, Mellon gave just two tips, and both have paid off. They are up 28% in the seven months since. He originally suggested BetOnSports (up 30%), which he thinks is still cheap but "short term may have run its course", and silver (+26%), which he thinks will keep going up and should more than double in price in 2006. He now likes Aim-listed property manager Speymill (SYG, 48p), which has German interests in which he has a large personal shareholding. Its new management is "top flight".

5. Andy Lynch - Schroder European Smaller Companies

In March, Lynch suggested that investors should look at Babis Vovos(+0.37%), Azimut (+44%), Geberit (+10.2%) and Fugro, which combined are up 26%. Fugro was the best performer (up 50%), but Lynch would no longer recommend buying the stock "as it is approaching fair value now". He would still own the others, but a new idea that he likes for 2006 is French battery maker Saft (SAFT, 20p). Its shares have fallen in the wake of a reduction in orders from the US military, but it seems likely that these will rise again as the US is "still heavily engaged in Iraq and Afghanistan". The shares have a forecast yield of 3.2% for 2006 and could afford to pay more.

6. Susan McDonald - Calculus Capital

All the way back in January, McDonald tipped two stocks. The first, XN Checkout Holdings, has risen 77% since, but Dunn-Line Plc has fallen 30%, making an overall return of 23%. She is, however, still optimistic about Dunn-Line its bottom line will still benefit if fuel prices fall and in the long term there could be consolidation in the industry. For 2006, she also likes both Egdon Resources (EDR, 99p) and Cellcast Plc (CLTV, 59p). Egdon is developing its gas-storage facilities and as it also pumps more oil, "its share price should benefit". Cellcast provides interactive programming broadcast via satellite or terrestrial, across most continents.

7. Sebastian Lyon - Troy Asset Management

On April Fool's day, Lyon tipped BT and Rutland trust but the joke seems to be on those who didn't follow him in. BT is up a satisfactory 5% and Rutland up 32%, giving a gain of 19%. He says he "would still happily buy BT (BT/A, 223p) shares as a low-risk purchase", especially as it comes with over 5% yield. However, he would not be keen to keep buying Rutland as the shares have had a good run and now "stand near to asset value", which makes them "more of a hold than a buy".

For 2006, he is looking to Reynolds American (RAI, 97p), which his colleague, Francis Brooke, tipped in a more recent personal view. Although the shares are up 15% since Brooke's tip, by their calculations "there is more to go for". An increase in the dividend of 31% is also good news, but Wall Street remains sceptical, which has made the shares cheaper than they should be.

8. Tim Price - Ansbacher & Co Ltd

Back at the beginning of the year, Price picked three FTSE 100 stocks which have since returned an impressive 18%. He picked Anglo-American (+50%), Tesco (1%) and United Utilities (+8%), mainly because they're all "heavily defensive" and because "we love yield".

However, even excluding the yield, between them these three have outperformed the market. Price would still hold Anglo-American (AAL, 1,894p), "a one-stop shop giving exposure to platinum, gold, diamonds, coal, base metals and minerals." On a p/e of 13 times, this is "not an expensive stock", and if you believe in the long-term commodities bull, "Anglo is probably not a bad way to play it". To take advantage of the commodities story, Price will now also be looking to BHP Billiton (BLT, 896p). Like Anglo, Billiton is "a good way to play the rally" in resources.

9. Bob Michaelson - Sagitta Asset Management

Since the end of July, Michaelson's picks have returned 15%. Having decided that the summer market was just like a summer pudding, "a bit soggy on the outside but full of delicious fruit on the inside", he thought that, as it was too early to predict a "global advance in economic activity", a "broad range of investment strategies works well". He picked William Ransom & Son (10.8%), Domnick Hunter Group (+47.2%) and Stedim Group (+8.1).

10. Barry Norris - Britannic Argonaut European Alpha fund

Towards the end of October, Norris said he liked TGS Nopec (+20.3%), Vallourec (+11.8%) and Southern Cross Resources (+5.5%). In just under two months, these three have returned 12.52% and he still likes all of them. As "corporate Europe is in rude health", he foresees dividend yields growing, which could mean investing for income is a good bet.

And the best of the rest

The fund managers above were not the only ones with great tips this year. Patrick Evershed, who manages the New Star Select Opportunities fund, tipped DebtFreeDirect in April, which has since risen an impressive 77%.

Rod Sleath, the manager of Collins Stewart Continental Europe Focus fund, gave three tips in July which he would still recommend now. Michelin (MLZ5, e30) has fallen 10% since he tipped it, but he believes that it "still continues to represent outstanding value". His two other tips were Cap Gemini (+31%) and GFI Informatique (+16%), which he believes still provide "excellent upside". For 2006, he suggests looking at Hyatt Regency (HY2, e9.60), a Greek casino operator, with a monopoly in the Athens area.

In September, Fun Technologies was tipped by James Thomson of the Rathbones Global Opportunities fund and has since risen by 32%, while Sandy Cross of Williams de Broe picked Premier Oil, which is up 24% since March. Looking further to the East, Jeremy Podger thought that the State Bank of India looked a good bet he was right, and it is up 26% since July.