Tuesday, May 15th, 2012
ASX Code: WAM
Share Price: $1.58
Industry: Funds Management
2012 Dividend: 10.5c (Fully Franked)
WAM Capital Limited is a Listed Investment Company (LIC) that invests in ASX listed securities and is one of three investment vehicles offered by the Wilson Asset Management group. WAM is focused on achieving absolute returns and the preservation of capital.
A LIC is an attractive way to invest in that it allows the investor to gain immediate exposure to a portfolio managed by an experienced portfolio manager. The LIC structure is arguably better than a unlisted managed fund because the manager is investing permanent capital and is not affected by redemptions.
WAM has delivered a positive return to investors since inception (August 1999). Performance to 30 April 2012 has been positive, having outperformed the All Ords Accumulation Index by 6.6%, 9.9% & 7.7%% over the past 1, 3 and 5 years respectively. This has been achieved by focusing on the identification of mispricing that often occurs in the small to mid-cap end of the market.
As at 30 April 2012, WAMs top 10 holdings were LDW, RKN, ELI, BRG, IBC, CCQ, MMS, CBAPB, SKE, EPX.
On 1 April 2012, the board announced a 1 for 1 bonus issues of options to acquire ordinary shares in the company at an exercise price of $1.60 and can be exercised at any time on or before 31 July 2013.
While mispricing often exists in the LIC space, with many currently trading at steep discounts to NTA the gap that was present on WAM shares has recently been bridged. As at 30 April 2012, WAMs after tax NTA was $1.57 while its shares were currently trading at $1.58. (As at close 10th May 2012)
Unlike managed funds, an investment in a LIC allows the investor to gain the benefit of franking on the dividends they receive. WAM has consistently paid dividends since inception and at current prices is yielding 6.65% pa (fully franked).