WAM Capital Limited For personal use only (WAM) · 3. Option issue • Bonus option issue on a 1...
Transcript of WAM Capital Limited For personal use only (WAM) · 3. Option issue • Bonus option issue on a 1...
WAM Capital Limited(WAM)
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Executive summary
• Investment Portfolio has outperformed by 7.5% financial year to 31 March 2012
• Average equity weighting 58%
• 10% increase in fully franked interim dividend to 5.5 cents per share
• Annualised fully franked dividend yield 6.9%*
• Bonus Option issue on a 1 for 1 basis – ASX Code: WAMOExercise at $1.60 at any time from now to 31 July 2013
• Cautiously optimistic on Australian equity market
* Based on 3 May closing price
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Option issue
• Bonus option issue on a 1 for 1 basis
• Exercise price: $1.60
• Can exercise at any time up until 31 July 2013
• Options trade on the ASX under the code “WAMO”
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Option issueFrequently asked questions
Why?• Create value for all shareholders• Increase size of Company - making it more relevant• Continue to grow the Company• Lower the Company’s management expense ratio (MER)
How will the money be invested?• In accordance with the existing investment process:
− Market Driven − Research Driven
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Consistent outperformance
Performance as at 31 March 2012
1 Yr %
3 Yrs %pa
5 Yrs %pa
10 Yrs %pa
Since Inception
%pa (Aug-99)
WAM Investment Portfolio +3.2% +22.5% +6.1% +13.5% +18.1%
S&P/ASX All Ordinaries Accumulation Index -6.2% +12.3% -1.8% +7.1% +7.5%
Outperformance +9.4% +10.2% +7.9% +6.4% +10.6%
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Performance Financial Year 31 March 2012
WAM Investment Portfolio +6.0%
WAM Pre-tax NTA per share growth plus dividends +3.2%
WAM Share price growth plus dividends +10.2%
S&P/ASX All Ordinaries Accumulation Index -1.5%
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Outperformance since inception
WAM Capital outperformed the market by 10.6% p.a. over 12½ years
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WAM Capital Ltd - Investment Portfolio (before all expenses, fees, taxes and dividends)S&P/ASX All Ordinaries Accumulation Index
Index re-based
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Premium / Discount to NTA D
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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
* To 20 April 2012
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Dividend growth
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Ordinary Fully Franked Dividend Special Fully Franked Dividend Equal Access Share Buy-Back
* Annualised interim dividend
Cents per share
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Discussion - some recent portfolio changes
New Stocks• Webjet Limited (WEB)• Ethane Pipeline Income Fund (EPX)• Flexigroup Limited (FXL)
Disposals• STW Communications Group Limited (SGN)• Macquarie Telecom Group Limited (MAQ)• Coal & Allied Industries Limited (CNA)
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Contributors / Detractors
Best Performing Stocks Financial Year to 31 March 2012
Company Strategy Unrealised/Realised Gains
SGI Signature Capital Investments Ltd Market Driven $1,412,041
AGI Ainsworth Game Technology Ltd Research Driven $1,077,752
BRG Breville Group Ltd Research Driven $1,040,702
Worst Performing Stocks Financial Year to 31 March 2012
Company Strategy Unrealised/Realised Losses
CAF Centrepoint Alliance Ltd Research Driven ($863,385)
SYM Symex Holdings Ltd Market Driven ($775,326)
AUN Austar United Communications Ltd Market Driven ($711,944)
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Top 10 Research Driven stocks as at 31 March 2012
Company % GrossAssets
RKN Reckon Limited 2.6%BRG Breville Group Limited 2.1%MMS McMillan Shakespeare Limited 1.7%COF Coffey International Limited 1.4%SKE Skilled Group Limited 1.3%AMM Amcom Telecommunications Limited 1.2%WEB Webjet Limited 1.1%RCR RCR Tomlinson Limited 1.0%IPP iProperty Group Limited 1.0%MYS MyState Limited 1.0%
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Ainsworth Game Technology Ltd (AGI) - Research Driven
• Identified opportunity through broker network
• Face to face management meeting at the company’s head office in Silverwater
• Company rated highly on our models
• Identified catalyst – earnings surprise
• Current P/E 13x growing at 50%
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Top 10 Market Driven stocks as at 31 March 2012
Company % GrossAssets
ELI Emerging Leaders Investments Limited 2.4%IBC Ironbark Capital Limited 1.6%CCQ Contango Capital Partners Limited 1.6%CBAPB CBA Perpetual Exc Resale Listed Sec-PERLS IV 1.4%CTN Contango Microcap Limited 1.2%ILF ING Real Estate Community Living Group 1.2%RHG RHG Limited 1.2%EPX Ethane Pipeline Income Fund 1.1%AIX Australian Infrastructure Fund 1.1%SDG Sunland Group Limited 1.1%
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Market Driven facts
Financial Year to 20 April 2012
Turnover of invested equity: 6.8 times or 680%
Number of trades: 2,183
Individual stocks traded: 254
Takeovers: 37
Placements: 53
Short Sales: 24
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Clarius Group Limited (CND) –Market Driven
• Idea generated from industry contact
• Followed company for years
• Stock started to trade below NTA which is comprised of cash and receivables
• Current share price: $0.41 vs NTA $0.41. No debt.
• Free option on a recovery as downside protected by NTA
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Did you know?…..Apple Inc. – Member of G20?
• Market Capitalisation US$600bn. P/E ratio: 13x• Net Cash: $US100bn• Annualised revenue: US$184bn. Annualised profit US$52bn• One third the size of Australia’s GDP• Five times the size of BHP Billiton• Larger than Poland, Belgium and Norway’s total GDP
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Apple Inc.Key metrics relative to Country GDPs
Rank Country GDP (2011 US$bn)
Rank Country GDP (2011 US$bn)
1 United States 15,065 21 Saudi Arabia 5602 China 6,988 22 Apple Market Cap 5563 Japan 5,855 23 Poland 5324 Germany 3,629 24 Belgium 5295 France 2,808 25 Taiwan Province of China 5056 Brazil 2,518 26 Norway 4797 United Kingdom 2,481 27 Islamic Republic of Iran 4758 Italy 2,246 28 Argentina 4359 Russia 1,885 29 Austria 425
10 India 1,843 30 South Africa 42211 Canada 1,759 31 United Arab Emirates 35812 Spain 1,536 32 Denmark 34913 Australia 1,507 33 Thailand 33914 Mexico 1,185 34 Columbia 32115 Korea 1,164 35 Greece 31216 Netherlands 858 36 Venezuela 31017 Indonesia 834 37 Finland 27118 Turkey 763 38 Singapore 26619 Switzerland 666 39 Malaysia 24820 Sweden 572 40 Nigeria 247
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Looking ahead
• Further interest rate cuts
• US economic recovery to continue
• Global deleveraging cycle to continue
• Cautiously optimistic on the Australian equity market
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Looking Ahead
• Global deleveraging to continue
• Interest rate cuts positive for equity markets
• Industrial stocks cheap on a historical basis
• Expect continued merger and acquisition activity in Australia with balance sheets in good shape
Forward P/E for the Australian market
*Source: Merrill Lynch
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Summary
• Investment team continue to apply rigorous investment process that will identify opportunities and deliver performance
• Board is focused on delivering a rising stream of fully franked dividends
• Cautiously optimistic on Australian equity market
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Questions
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Additional Information
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Who is Wilson Asset Management?
• The WAM Group is the fund manager of three listed investment companies and one unlisted fund, with funds under management of approximately $340 million.
• 3 Listed Funds:− WAM Capital Ltd (ASX: WAM) − WAM Research Ltd (ASX: WAX)− WAM Active Ltd (ASX: WAA)
• Focus on listed industrial companies on the ASX
• Concentrates on growth companies predominantly in the small to mid cap area of the marketF
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• Quick decision making
• Bottom up approach
• Staying very close to the market and investee companies
• Strong risk adjusted returns
• Significant market experience
• Closed end fund - avoiding being forced seller and buyerat inappropriate times
• Actively managed portfolio
What Wilson Asset Management delivers
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The Team
Geoff Wilson - Chairman / Portfolio Manager
Kate Thorley - CEO & Company Secretary
Chris Stott - CIO / Portfolio Manager
Matt Haupt - Equity Analyst
Martin Hickson - Analyst / Dealer
Mark Tobin - Assistant Analyst
Linda Vo - Senior Financial Accountant
Lillie Johnson - Accountant
Mary-Ann Baldock - Office Manager
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Our Business Model
Investment Focus –Growth Companies
LIC Structure Benefits
Experienced Team
Investment Process
Flexible Mandate
Tight Cost Control
Superior Long Term Performance Record
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Our Funds
ResearchDriven
MarketDriven
WAM Active (WAA)
WAM Capital(WAM)
WAM Research(WAX)
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Superior returns from growth companies
• We buy growth companies that trade on low price to earnings multiples (P/E)
• We buy when we can identify a catalyst that will increase the valuation
• We find these opportunities are more prevalent in the small to mid cap industrials sector
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Mid to small cap sector benefits
• Small cap value has outperformed all other sectors*
• Under researched
• Access to management - ability to build strong relationships
• Life cycle of the business - ability to grow at a faster rate than larger companies
• Higher risk and higher returns
• More takeover activity
* Source – Ibbotson Associates
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Smaller and more rewardingF
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Listed Investment Companies are very attractive investment vehicles
• LICs have outperformed the market ^
• Studies show LICs outperform managed funds*^
• Closed pool of capital – never forced seller or buyer
• Provide consistent flow of fully franked dividends
• Lower MER compared to managed funds
• Provide opportunities – can trade at a premium/discount to assets
• Trades on the ASX which provides intra-day liquidity
^ Australian Study: Morgan Stanly Smith Barney* UK Study: Collins Stewart
LICs are superior investment vehicles
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LICs outperform the share market over the long term
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WAM Funds outperformance vs ASX LIC Index
*Source: Iress
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Investment objectives
The investment objectives of WAM Capital are:
• To deliver a rising stream of fully franked dividends;
• To provide capital growth; and
• To preserve capital.
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Robust investment process“Research Driven”
Identify Company
Undertake Detailed Research
Visit with Management – 800+ companies p.a.
Rank the Company (WAM’s unique rating template)
Catalyst identified or occurs
Buy or short sell shares
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Investment process“ Market Driven”
We scour the market for opportunities:
• Initial public offerings• Capital raisings• Block trades• Oversold position• Takeovers• Listed Investment Companies (LIC) discount to net tangible assets (NTA)• Stocks trading at a discount to their NTA• Earnings momentum / surprise• Short selling• Market themes and trendsF
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External research coverage
Research Houses covering listed investment companies & WAM Capital:
- Bell Potter Securities- Morgan Stanley Smith Barney- Zenith Partners - Independent Investment Research- APAM LIC Research- Evans & Partners- JBWere- Morningstar- E.L.&C. Baillieu
The Company is on the approved product list of the Association of Independently Owned Financial Planners (AIOFP), and the Company is listed on BT SuperWrap and BT Investment Wrap platforms.
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Website – wamfunds.com.au
Subscribe for weekly emails – includes market update
Audio casts – Monthly
Media – Sky Business, Switzer, CNBC, Newspapers, Industry Magazines
Half yearly Investor Newsletters
Half yearly Results and Media Release
Attend and present at industry conferences – ASX, AIA, ASA
Investor communicationsF
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DisclaimerThis presentation has been prepared for use in conjunction with a verbal presentation and should be read in that context.
Information for the graphs, charts and quoted indices contained in this presentation has been sourced from IRESS Market Technology, Credit Suisse Strategy, Morgan Stanley Smith Barney, Merrill Lynch, Ibbotson Associates, The New York Times, Collins Stewart, WAM Capital Ltd, WAM Research Ltd and WAM Active Ltd unless otherwise stated.
The information in this presentation is only intended for Australian residents.
The purpose of this presentation is to provide information only and the contents of the presentation does not purport to provide investment advice. We strongly suggest that investors consult a financial adviser prior to making any investment decision.
The presentation does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making investment, financial or other decisions. The information is selective and maynot be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular investment or security, or Fund offered by Wilson Asset Management.
The information provided in the presentation is given in good faith and is believed to be accurate at the time of compilation. Neither Wilson Asset Management, WAM Capital Ltd, WAM Research Ltd and WAM Active Ltd nor its directors or employees make any representation or warranty as to the accuracy, reliability, timeliness or completeness of the information.To the extent permissible by law, Wilson Asset Management, WAM Capital Ltd, WAM Research Ltd and WAM Active Ltd and its director and employees disclaim all liability (whether arising in contract, tort, negligence or otherwise) for any error, omission, loss or damage (whether direct, indirect, consequential or otherwise).
Performance figures quoted in the report are past performance. Past performance is not an indicator of future performance. Neither Wilson Asset Management, WAM Capital Ltd, WAM Research Ltd and WAM Active Ltd nor its directors or employees guarantee or make any representation as to the performance of the Funds, the maintenance or repayment of capital, the price at which shares may trade or any particular rate of return.
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