WAM Research Ltd. · ASX:WAX
WAM Research — Investor Presentation (May 2015)
51 slides from WAM Research's investor presentation, May 19, 2015
Slide 1: Investor Presentation May / June 2015
For personal use only Investor Presentation May / June 2015
Slide 2: Disclaimer
For personal use only Disclaimer This 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, Deltec, Macqu
Slide 3: Agenda
Agenda For personal use only • About Wilson Asset Management • Market overview and outlook • Investment portfolio • Our listed investment companies • WAM Capital Limited • WAM Research Limited • WAM Active Limited • Investor communications • Making a difference 3
Slide 4: About Wilson Asset Management
For personal use only About Wilson Asset Management 4
Slide 5: About Wilson Asset Management
About Wilson Asset Management For personal use only • Our team is passionate about making a difference • We are innovative, agile and entrepreneurial. Our investment approach and results are proven • We invest our time and expertise in causes that resonate most with our people Winner of the Listed I
Slide 6: Experienced team
Experienced team For personal use only Geoff Wilson Martin Hickson B Sc GMQ FAICD FFinsia B Bus B Comp Chairman / Senior Equity Analyst / Portfolio Manager Dealer Kate Thorley Matthew Haupt B Com CPA Grad Dip ACG CFA B Com Grad Dip App Fin Chief Executive Officer / Senior Equity Analyst Company Secr
Slide 7: Listed investment companies
Listed investment companies For personal use only (ASX: WAM) (ASX: WAX) (ASX: WAA) (ASX: FGX) Gross assets $836 million $185 million $37 million $210 million Share price* $1.92 $1.20 $1.07 $1.13 Pre tax NTA $1.83 $1.20 $1.04 $1.14 Premium/ (Discount) to 4.9% 0.0% 2.9% -0.9%# NTA* Fully franked divid
Slide 8: Future Generation Investment Company
Future Generation Investment Company For personal use only • Launched in September 2014, Future Generation Investment Company (FGX) is a philanthropic wealth creation vehicle • Provides access to the best of the best Australian fund managers without the cost of management and performance fees • Dona
Slide 9: Future Generation Global Investment Company
Future Generation Global Investment Company For personal use only • We are looking to establish a new entity – Future Generation Global Investment Company • The Future Generation Global Investment Company would provide shareholders with access to global fund managers • It would operate under the sam
Slide 10: Investment process
Investment process For personal use only Exposure to both research and market driven strategies • Extensive company research (meeting • Scour the market for trading 1,000+ companies per year) focused on opportunities forecasting free cashflows and rating investment attributes • Allows sound return w
Slide 11: Research driven investment process
Research driven investment process For personal use only Investment universe 2,000+ Investment ideas Preparation and company meetings (1,000+ p.a.) 250 companies under review Analysis: qualitative and quantitative Stock rankings Catalyst identified PORTFOLIO 20-60 stocks selected 11
Slide 12: Market driven investment process
Market driven investment process For personal use only • We utilise our extensive information network in the investment community and exploit mispricing in the market. These opportunities include: • initial public offerings • capital raisings • block trades • oversold positions • takeovers • LIC dis
Slide 13: Capital preservation
Capital preservation For personal use only Average cash Cash at 30 Objective to deliver risk- since April 2015 adjusted returns and inception preserve capital • Default to cash 34% 38% • Closed pool of capital • Nimble and flexible 33%* 44% mandate • Use of stop losses • Weighting of investments 47%
Slide 14: Our LICs trading at premiums to NTA
Our LICs trading at premiums to NTA For personal use only Share price trading at premium/discount to Net Tangible Assets (pre-tax) 35% 25% 15% 5% -5% -15% -25% -35% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 35% 25% 15% 5% -5% -15% -25% -35% Jul-10 Jan-11 Ju
Slide 15: Growing funds under management
Growing funds under management For personal use only • We have recently grown our funds under management (FUM), reaching more than $1 billion across three LICs • Larger FUM has a range of benefits to shareholders: • Reduced fixed management expense ratio (MER) • Increased liquidity in shares • Great
Slide 16: Imputation system under review?
Imputation system under review? For personal use only Chairman David Murray, Financial System Inquiry, December 2014 “The case for retaining dividend imputation is less clear than in the past. To the extent that dividend imputation distorts the allocation of funding, a lower company tax rate would l
Slide 17: Imputation system under review?
Imputation system under review? For personal use only • Last year we lodged two separate submissions to the Financial System Inquiry advocating for a fairer, more effective Australian financial system • Next month we will lodge a submission to Treasury in response to the Tax White Paper • We will ar
Slide 18: Market overview and outlook
For personal use only Market overview and outlook 18
Slide 19: Equity market outlook
Equity market outlook For personal use only Mining boom ends Banks Equity capital valuations requirements full Bond market Interest rates 19
Slide 20: The way you shop for groceries will change
The way you shop for groceries will change… For personal use only • Woolworths (ASX: WOW) and Wesfarmers-owned Coles (ASX: WES) quasi-duopoly structure and industry leading margins are under threat • Woolworths and Coles’ now face an onslaught of new competition from Aldi, Lidl and Costco, which off
Slide 21: As will the way you watch television
As will the way you watch television… For personal use only • Consumers are starting to stream television content on demand as opposed to watching via the traditional digital signal • Netflix, which entered Australia in March, along with Stan and Presto are set to gain significant local market share
Slide 22: Equity valuations look full
Equity valuations look full… For personal use only ASX 200 1 Year Forward PE 22 Source: Deltec
Slide 23: While earnings growth is lacking
While earnings growth is lacking For personal use only Update chart 23 Source: Macquarie Group Research
Slide 24: When US interest rates rise
When US interest rates rise For personal use only There is a growing risk of retreat from US equities when rates finally rise 24 Source: IRESS
Slide 25: Investment portfolio
For personal use only Investment portfolio 25
Slide 26: Top research driven holdings
Top 10 research driven holdings For personal use only ASX Code Company ASB Austal Limited SGH Slater & Gordon Limited TPM TPG Telecom Limited ECX Eclipx Group Limited RFG Retail Food Group Limited ENE Energy Developments Limited Held in WAM Capital ISU iSelect Limited and MTR Mantra Group Limited WA
Slide 27: Top market driven holdings
Top 10 market driven holdings For personal use only ASX Code Company HHV Hunter Hall Global Value Limited TOL Toll Holdings Limited CYA Century Australia Investments Limited MYX Mayne Pharma Group Limited EGP Echo Entertainment Group Limited BAP Burson Group Limited Held in FXJ Fairfax Media Limited
Slide 28: Top contributors and detractors
Top contributors and detractors For personal use only Research Driven Investment Strategy Contributors % Detractors % STW Communications IPH IPH Limited 6.9 SGN -2.1 Group Limited MTR Mantra Group Limited 6.8 GXL Greencross Limited -1.8 Corporate Travel CTD 6.1 NVT Navitas Limited -1.5 Management Li
Slide 29: What we like
What we like For personal use only Blackmores Limited (ASX: BKL) Profile • Australia’s leading natural health brand Background • Market cap $1.2 billion • PE of 29x • EPS growth of 60% • Key products include vitamins, herbal and mineral nutritional supplements Catalysts • Earnings momentum • Growth
Slide 30: What has worked
What has worked For personal use only Smartgroup Corporation Ltd (ASX: SIQ) Profile • Salary packaging and novated lease administrator Background • Listed on the ASX in July 2014 • Market cap: $200 million • PE ratio 10.5 times • Growth of 16% Catalysts • Favourable outsourcing trends within the gov
Slide 31: What didn't work
What didn’t work For personal use only STW Communications Group Limited (ASX: SGN) Profile • Australasia’s leading marketing and communications services group Background • Market Cap $278 million, PE of 5.9x with low growth • 75 operating companies • Major brands include: Ogilvy, Ikon and Buchanan G
Slide 32: WAM Capital Limited
For personal use only WAM Capital Limited (ASX: WAM) 32
Slide 33: Recent highlights
Recent highlights For personal use only 14.0c 7.3% Fully franked annualised interim Fully franked dividend yield* dividend 16.1% 38% Investment portfolio performance** Current cash weighting^ *As 13 May 2015 **12 months to 30 April 2015 ^As at 30 April 2015 33
Slide 34: Dividend growth
Dividend growth For personal use only WAM Capital dividends since inception Cents per share 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Ordinary fully franked dividend Special fully franked dividend Equal access share buy-back *Annualised interim dividend • Estimated profit reserve is 18.5 cents pe
Slide 35: Outperformance
Outperformance For personal use only Since Performance at Inception 30 April 2015 (% pa) 1 Yr 3 Yrs 5 Yrs 10 Yrs (Aug 1999) WAM Investment 16.1% 18.3% 15.2% 14.2% 18.0% Portfolio* S&P/ASX All Ordinaries 10.2% 13.7% 8.2% 8.4% 8.7% Accumulation Index Outperformance +5.9% +4.6% +7.0% +5.8% +9.3% *Inves
Slide 36: Capital management
Capital management For personal use only Shareholder Purchase Plan (SPP) and Placement • WAM Capital raised $193.5 million through an SPP and placement • More than 8,800 existing WAM shareholders invested $103.4 million at $1.90 through the SPP • The Placement was oversubscribed, raising $90.1 milli
Slide 37: WAM Research Limited
For personal use only WAM Research Limited (ASX: WAX) 37
Slide 38: Recent highlights
Recent highlights For personal use only 8.0c 6.7% Fully franked annualised interim Fully franked dividend yield* dividend 23.8% 44% Investment portfolio performance** Current cash weighting^ *As at 13 May 2015 **12 months to 30 April 2015 ^As at 30 April 2015 38
Slide 39: Dividend growth
Dividend growth For personal use only WAM Research dividends since inception Cents per share 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Ordinary fully franked dividend Special fully franked dividend *Annualised interim dividend • Estimated profit reserve is 26.7 cents per share and the franking account
Slide 40: Outperformance
Outperformance For personal use only Since change in investment Performance at strategy 30 April 2015 (% pa) 1 Yr 2 Yrs 3 Yrs (July 2010) WAX Investment 23.8% 20.4% 23.9% 19.6% Portfolio* S&P/ASX All Ordinaries 10.2% 10.3% 13.7% 10.8% Accumulation Index Outperformance +13.6% +10.1% +10.2% +8.8% *Inv
Slide 41: Capital management
Capital management For personal use only • 1 for 2 Bonus Option Issue announced 28 October 2013 • Exercise price: $1.20 Exercise • Options must be exercised by 17 June 2015 • Options trading at: $0.001* (ASX: WAXO) • Share price: $1.20* (ASX: WAX) • $24.3m received to date* from options exercised *A
Slide 42: WAM Active Limited
For personal use only WAM Active Limited (ASX: WAA) 42
Slide 43: Recent highlights
Recent highlights For personal use only 4.0c 2.4% Capital Return Premium to NTA* 7.6% 29% Investment portfolio performance** Current cash weighting^ *As at 13 May 2015 **12 months to 30 April 2015 ^As at 30 April 2015 43
Slide 44: Dividend growth
Dividend growth For personal use only WAM Active dividends since inception Cents per share 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Fully franked dividends Capital Return • Estimated profit reserve is 3.2 cents per share and the franking account deficit o
Slide 45: Capital management
Capital management For personal use only • Capital return approved at EGM 19 May 2015 • Intention to pay 4.0 cents per share Key Dates Ex date 21 May 2015 Record date 25 May 2015 Payment date 1 June 2015 45
Slide 46: Positive performance
Positive performance For personal use only Since Performance at Inception 30 April 2015 (% pa) 1 Yr 3 Yrs 5 Yrs (Jan 08) WAA Investment 7.6% 13.4% 10.4% 12.5% Portfolio* S&P/ASX All Ordinaries 10.2% 13.7% 8.2% 2.9% Accumulation Index Outperformance -2.6% -0.3% +2.2% +9.6% UBS Bank Bill Index (cash)
Slide 47: Investor communications
For personal use only Investor communications 47
Slide 48: Investor communication
Investor communication For personal use only Weekly emails Half yearly Monthly NTA Half & full year including market national investor announcement financial results update presentations & investment update Website Media Industry Independent research wamfunds.com.au conferences 48
Slide 49: Community investment
Community investment For personal use only All donations are made by Wilson Asset Management (the investment manager) and/or its staff, not the listed entities. 49
Slide 50: Making a difference
Making a difference For personal use only WAM Gives • New initiative empowering each individual to identify causes close to them • The management company then gifts financial support for a charitable donation Variety cycle • Geoff took part in the 2015 Variety Cycle ride 50
Slide 51: Contact us
Contact us For personal use only Email: info@wamfunds.com.au Phone: (02) 9247 6755 Fax: (02) 9247 6855 Website: www.wamfunds.com.au 51