WAM Capital Ltd. · ASX:WAM
WAM Capital — Investor Presentation (May 2010)
35 slides from WAM Capital's investor presentation, May 21, 2010
Slide 1: WAM Capital Limited Presentation May / June 2010
WAM CAPITAL LIMITED (WAM) For personal use only A.B.N. 34 086 587 395 Presentation May / June 2010
Slide 2: What is WAM Capital (WAM)
What is WAM Capital (WAM) For personal use only • An dynamic investor in listed Australian equities • Two distinct styles: 1. Research Driven (700+ company meetings per annum) 2. Market Driven (participated in 168 capital raisings in last 10 months) • Concentrates on small to medium industrial compa
Slide 3: What WAM Delivers
What WAM Delivers For personal use only • 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 buyer at inappropriate times 3
Slide 4: Risk Profile – Low
Risk Profile – Low For personal use only • Average net cash position of 27.4% over the last 11 years Percentage • Cash was 29.1% in Aug 2009, in Cash cash 46.3% at April 2010 70.00% • Closed end fund – avoids major 60.00% redemptions when market is falling 50.00% • Highly diversified with 40.00% pur
Slide 5: Markets
For personal use only Markets 5
Slide 6: S&P/ASX All Ordinaries Index vs S&P Index
S&P/ASX All Ordinaries Index vs S&P 500 Index For personal use only 110.0% 108.0% 106.0% 104.0% 102.0% 100.0% 98.0% 96.0% Australian market has underperformed 94.0% the US market in calendar year 2010 to 92.0% date. This is a direct result of rising interest rates in Australia. 90.0% Jan‐10 Feb‐10 M
Slide 7: S&P/ASX Industrials Index vs S&P/ASX Resources Index
S&P/ASX 300 Industrials Index vs S&P/ASX 300 Resources Index For personal use only Index 1.05 1.03 1.01 0.99 0.97 0.95 The Resources sector has 0.93 been more volatile in 0.91 calendar year 2010 to date. 0.89 0.87 0.85 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10 ASX 300 Industrials ASX 300 Resources
Slide 8: S&P/ASX Small Ordinaries Index
S&P/ASX Small Ordinaries Index For personal use only Index 4100 3900 3700 3500 3300 The small companies index has not risen since August 2009. 3100 2900 2700 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10
Slide 9: S&P/ASX All Ordinaries Index 1985 - 1994
S&P/ASX All Ordinaries Index 1985 - 1994 For personal use only Index 2500 2300 2100 1900 1700 1500 1300 1100 Bear markets can take up to 5 years 900 before a new bull market begins. 700 500 1985 1986 1987 1989 1990 1991 1993 1994
Slide 10: S&P/ASX All Ordinaries Index 1969 - 1979
S&P/ASX All Ordinaries Index 1969 - 1979 For personal use only Index 500 450 400 350 300 250 200 150 It can take up to a decade before a new historical high is reached. 100 50 0 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979
Slide 11: S&P/ASX All Ordinaries Index from 2005 to date
S&P/ASX All Ordinaries Index from 2005 to date For personal use only Index 7000 We are currently only 2½ 6500 years into current bear market. 6000 5500 5000 4500 4000 3500 3000 Jan‐05 Jul‐05 Jan‐06 Jul‐06 Jan‐07 Jul‐07 Jan‐08 Jul‐08 Jan‐09 Jul‐09 Jan‐10
Slide 12: S&P/ASX Prospective P/E valuation
S&P/ASX 300 Prospective per valuation For personal use only Price to earnings ratio 21 20 19 18 17 High (+1Std Dev) 16 15 14 AVERAGE 13 12 Lower (-1 Std 11 Valuations for the Australian sharemarket look cheap BUT expect 10 2011 earnings to be downgraded. 9 8 Source: GSJBW Research estimates
Slide 13: S&P/ASX Industrials Index
S&P/ASX 300 Industrials Index For personal use only Index 10000 The Australian Industrial Index is only 10% higher over the last 10 years. 8000 6000 4000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Slide 14: S&P/ASX Small Industrials Index
S&P/ASX Small Industrials index For personal use only Index 4000 Meanwhile, the Small 3500 Industrial Index has fallen approximately by 20% over last 10 years. 3000 2500 2000 1500 1000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Slide 15: Financial Highlights
For personal use only Financial Highlights 15
Slide 16: Financial Year to April 2010
Financial Year to 30 April 2010 For personal use only 2010 Total Income $43.1m Operating profit after tax $28.7m Operating profit per share 27.6c 16
Slide 17: Performance at April 2010
Performance at 30 April 2010 For personal use only S&P/ASX Annualised All Ords. Gross Portfolio* Outperformance performance Accumulation Index 1 year +42.3% +34.2% +8.1% 3 years +2.1% -3.7% +5.9% 5 years +13.2% +8.6% +4.6% 7 years +15.6% +11.7% +3.9% Since inception +19.3% +9.0% +10.3% * The change
Slide 18: Portfolio Structure
Portfolio Structure For personal use only As at 30 April 2010 Investment Type $m % Listed Equities 91.8 53.7% Term Deposits and Cash 79.3 46.3% Total Long Portfolio 171.0 100.0% Short Portfolio (2.0) 100.0% No. Ordinary Shares on issue 103,931,192 18
Slide 19: Dividends
For personal use only Dividends 19
Slide 20: Dividends
Dividends For personal use only • Government reform due June 2010 - will change the way dividends are paid • Dividends will no longer be affected by unrealised movements in value of the portfolio • Dividends can be paid if the company is solvent • WAM has franking credits which allows it to pay a 5.
Slide 21: Dividends
Dividends For personal use only Minimum annual yield of 8% over last 11 years Cents per Share 18 16 14 12 10 8 6 4 2 0 Ordinary Special Equal Access Share Buy‐Back * Annualised interim dividend Source: ASX 21
Slide 22: WAM Capital Premium/Discount to NTA
WAM Capital Premium/Discount to NTA For personal use only 30.0% 20.0% 10.0% 0.0% ‐10.0% ‐20.0% ‐30.0% ‐40.0% 22
Slide 23: Stock Selection
For personal use only Stock Selection 23
Slide 24: Top Stocks as at April 2010
Top 10 Stocks as at 30 April 2010 For personal use only % FY10 Market % of Change P/E Value Gross Average Code Company Ratio* $m Assets Cost RKN Reckon Ltd 15.8 9.1 5.4% 129.7% REA REA Group Ltd 30.4 3.8 2.2% 92.0% MCP McPherson’s Ltd 8.3 3.4 2.0% 186.5% RHG RHG Ltd ^ 3.1 1.8% 80.8% ORL OrotonGroup
Slide 25: Best Performing Stocks
Best Performing Stocks 10 months to 30 April 2010 For personal use only Unrealised/Realised Code Company % Gains RKN Reckon Ltd $4.3m +84% ORL OrotonGroup Ltd $2.2m +122% MCP McPherson’s Ltd $2.1m +89% REA REA Group Ltd $1.8m +109% AHE Automotive Holdings Group Ltd $1.6m +78% 25
Slide 26: Worst Performing Stocks
Worst Performing Stocks 10 months to 30 April 2010 For personal use only Unrealised/Realised Code Company % Losses ALS Alesco Corporation Ltd ($0.7m) -23% BOL Boom Logistics Ltd ($0.6m) -30% PBP Probiotec Ltd ($0.5m) -20% CPR Clive Peeters Ltd ($0.4m) -53% MVU MatrixView Ltd ($0.4m) -89% 26
Slide 27: Stock Stories
Stock Stories For personal use only • Primary Health Care Ltd (PRY) • Vision Group Holdings Ltd (VGH) • Skilled Group Ltd (SKE) 27
Slide 28: Structural and Regulatory Change
For personal use only Structural and Regulatory Change 28
Slide 29: Regulatory Update
Regulatory Update For personal use only Henry Review • Resource super profits tax (RSPT) • Superannuation levy from 9% to 12% by 2020 • Company tax rate reduced to 28% by 2014 • No change to tax concessions applying to the Not For Profit sector: positive for McMillan Shakespeare • No change to divid
Slide 30: Positive Structural change for Listed Investment Co's (LICs)
Positive Structural change for Listed Investment Co’s (LICs) For personal use only • Banning of commissions and volume based payments to financial planners from 2012 (Ripoll Review)– very positive for LICs • LICs will have a level playing field from 2012 • LICs are very attractive investment vehicle
Slide 31: Outlook
Outlook For personal use only • Increase in M&A Activity • Increase in short selling opportunities • Participation in discounted capital raisings • Position for extreme valuation opportunities • Defensive 31
Slide 32: WAMI in the Community
WAMI in the Community For personal use only Wilson Asset Management proudly support the following organisations: 32
Slide 33: Shareholder Communication
Shareholder Communication For personal use only We value your feedback! Website www.wilsonassetmanagement.com.au Audio casts Presentations Investor Report Monthly Investment Update & NTA announcements 33
Slide 34: Questions?
For personal use only Questions? 34
Slide 35: Disclaimer
Disclaimer This presentation has been prepared for use in conjunction with a verbal presentation and should be read in that context. For personal use only Information for the graphs, charts and quoted indices contained in this presentation has been sourced from IRESS Market Technology and WAM Capita