WAM Capital Ltd. · ASX:WAM
WAM Capital — Investor Presentation (June 2009)
36 slides from WAM Capital's investor presentation, June 2009
Slide 1: WAM Capital Limited Presentation May/June 2009
WAM CAPITAL LIMITED (WAM) A.B.N. 34 086 587 395 PRESENTATION MAY/JUNE 2009 1
Slide 2: Objectives
OBJECTIVES • High Real Rate of Return • Preserve Capital • Strong Dividend Flow 2
Slide 3: Performance
PERFORMANCE WAM All Ord Outperformance Small Ord Outperformance Capital* Financial -10% -27% +17% -35% +25% YTD 3 Year -2% -18% +16% -28% +26% * Gross performance is the change in the portfolio before all expenses, fees and taxes 3
Slide 4: Dividends
DIVIDENDS 4
Slide 5: How do we pay dividends?
HOW DO WE PAY DIVIDENDS? • Current pre-tax NTA 133.13c • FY2009 current losses $10.6m (or 10.4c) • Need a return of over 8.4% as at 30 April 2009 to commence paying a dividend 5
Slide 6: Dividends
DIVIDENDS • Need a profit to pay a dividend • Dividends are only payable from retained earnings or current year year’s s profits of the company. • Excess franking credits 6
Slide 7: Dividends
DIVIDENDS • Two types of listed investment company (LIC) - Investor - Trader • Traders d profit fi iis iimpacteddb by changes in the value of the portfolio either i h positive i i or negative i • A company can only pay dividends from profit 7
Slide 8: NTA & Share Price
NTA & SHARE PRICE 8
Slide 9: Discount to NTA
DISCOUNT TO NTA As at 30 April 2009 Cents Discount Pre-tax Pre tax NTA 133 1* 133.1 27 5% 27.5% After-tax NTA 130.7* 26.2% Share Price 96.5** * Includes 11.4 cents per share in tax assets ** As at close of trading 18 May 2009 9
Slide 10: What drives the share price
WHAT DRIVES THE SHARE PRICE 1. Performance 2. Market Relevance • Size • Liquidity q y • Track record • Years in business 3. Yield 4. Regulatory environment 5. Supply and demand 10
Slide 11: Performance history
PERFORMANCE HISTORY 600 550 500 450 400 % Perrformance 350 300 250 200 150 100 50 - -50 August 1999 - April 2009 WAM Capital Ltd Gross Portfolio before all expenses, fees, taxes and dividends All Ordinaries Accumulation Index 11
Slide 12: NTA & share price history
NTA & SHARE PRICE HISTORY 2.10 1.90 1.70 1.50 1 30 1.30 1.10 0.90 0.70 0.50 NTA After-tax Share price 12
Slide 13: WAM Capital premium/discount to NTA
WAM CAPITAL PREMIUM/DISCOUNT TO NTA 40.00% 30.00% 20.00% 10.00% 0.00% -10.00% -20.00% -30.00% -40.00% 13
Slide 14: Australian Foundation Investment Company premium/discount
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED Share Price to Net Asset Backing - Premium/Discount Prem/Disc April 2009 30% 20% 10% 0% -10% -20% Price/NTA Prem/Disc BEFORE provision for tax on unrealised gains Price/NTA Prem/Disc AFTER provision for tax on unrealised gains -30% 31/01/1988 31/01/19
Slide 15: Stock Selection
STOCK SELECTION 15
Slide 16: Portfolio structure
PORTFOLIO STRUCTURE As at As at 28 February 2009 30 April 2009 $m % % $m % % Research 16 47% 26 37% Trading 18 53% 45 63% Long Portfolio 34 100% 30% 71 100% 56% Sh t Portfolio Short P tf li - - - - Fixed Interest and Cash 82 70% 55 44% Gross Assets 116 100% 126 100% 16
Slide 17: Top 10 stocks
TOP 10 STOCKS as at 30 April 2009 % Change FY09 P/E Market % off Gross Average Code Company Ratio Value $m Assets Cost RKN Reckon Ltd 11.4 $5.5 4% +58% MLB Melbourne IT Ltd 8.3 $3.1 2% +23% MMS McMillan Shakespeare Ltd 7.5* $3.1 2% +22% RRA RR Australia Ltd 6.3 $2.0 2% -13% MCU Mitchell Comm. Group
Slide 18: RCG Corporation (RCG)
RCG Corporation (RCG) • $0.14 $0 14 cash vs current share price $0.29. RCG Corporation vs S&P/ASX All Ordinaries Index • New format stores $0.60 8000 7000 s Index $0.50 6000 $0 40 $0.40 S&P/ASX All Ordinaries 5000 • Acquisitions Price $0.30 4000 3000 $0.20 2000 • Experienced management $0.10 1000 te
Slide 19: Fantastic Holdings (FAN)
Fantastic Holdings g (FAN) • Furniture retailer 5 brands Fantastic Furniture vs S&P/ASX All Ordinaries Index • Approaching 110 stores $5.00 8000 $4.50 7000 es Index $4.00 6000 $3.50 • Recent acq acquisitions isitions look to 5000 SX All Ordinarie $3.00 Price drive 2009/2010 earnings $2.50 4000 $2.00
Slide 20: Fantastic Holdings (FAN) housing affordability
Fantastic Holdings g (FAN) H Housing i affordability ff d bilit isi improving i i 000's 000's 45 12 Housing g finance for existing g homes ex refi (LHS) ( ) 11 40 Housing finance for new homes (RHS) 10 35 9 30 8 25 7 20 6 15 5 10 4 Jun-85 Jun-87 Jun-89 Jun-91 Jun-93 Jun-95 Jun-97 Jun-99 Jun-01 Jun-0
Slide 21: Fantastic Holdings (FAN) first home buyers
Fantastic Holdings g (FAN) Fi First home h buyers b are now entering i the h market k % of All Dwellings Financed % of All Dwellings Financed 28 28 First home buyers First-home Average 26 26 24 FHOG trebled for 24 new homes (Nov 08) 22 22 20 20 18 18 16 16 14 14 FHOG grant introduced (Jul 00) 12 12
Slide 22: Fletcher Building (FBU)
Fletcher Building g (FBU) • Diversified building materials business Fletcher Building vs S&P/ASX All Ordinaries Index $14.00 8000 • Recent equity raising has 7000 &P/ASX All Ordinariies Index $12.00 improved p g gearing g $10.00 6000 5000 $8.00 Price 4000 $6.00 3000 • Discount to peers $4.00 2000 S&
Slide 23: Fletcher Building (FBU) NZ house sales
Fletcher Building g (FBU) NZ house sales pointing to turnaround in housing consents 36,000 140,000 120 000 120,000 30,000 100,000 24,000 80,000 18,000 60,000 12,000 40,000 6,000 20,000 0 0 Dwelling consents (LTM) House sales (LTM adv 5 mths - RHS) 23 Source: Macquarie Securities
Slide 24: Fletcher Building (FBU) house sales vs share price
Fletcher Building g (FBU) NZ house sales vs FBU share price NZ house sales (LN) FBU total return index (LN) Lead:1 month Lag: Lag:5 0 months months Nov-08 trough ?? Apr 96 Nov 96 Jun 97 Aug 98 Oct 99 Dec 00 Jul 01 Feb 02 Apr 03 Nov 03 Jun 04 Aug 05 Oct 06 Dec 07 Jul 08 Feb 09 Jan 98 Mar 99 May 00 Se
Slide 25: Markets
MARKETS 25
Slide 26: S&P/ASX Small Ordinaries Index
S&P / ASX Small Ordinaries Index: 1 March 2003 to 15 May 2009 4500 4000 3500 3000 2500 2000 1500 1000 500 0 26
Slide 27: S&P/ASX All Ordinaries Index
S&P / ASX All Ordinaries Index: 1 March 2003 to 15 May 2009 8000 7000 6000 5000 4000 3000 2000 1000 0 27
Slide 28: S&P/ASX Small Industrials Index
S&P / ASX Small Industrials Index: 1 March 2003 to 15 May 2009 4500 4000 3500 3000 2500 2000 1500 1000 500 0 28
Slide 29: S&P/ASX Industrials Index
S&P / ASX Industrials Index: 1 March 2003 to 15 May 2009 8000 7000 6000 5000 4000 3000 2000 1000 0 29
Slide 30: Recovery phases - major market falls
Recovery Phases - Major Market Falls - Daily Moves Index rebased to 100 at 1931 1974 1982 1987 1991 2008 150 140 130 120 110 100 90 0 50 100 150 200 250 300 350 Days from market trough Source: IRESS, GSJBW Research 30
Slide 31: S&P500 Industrial valuation of equities relative to bonds
0 0.5 1 1.5 2 2.5 Apr-87 Oct-87 Apr-88 Oct-88 Apr-89 Oct-89 Apr-90 Oct-90 Apr-91 Oct-91 Apr-92 Oct-92 Apr-93 EQUITIES RELATIVELY UNDERVALUED Oct-93 EQUITIES RELATIVELY OVERVALUED Apr-94 Oct-94 Apr-95 Oct-95 Apr-96 Oct-96 Apr-97 Oct-97 Apr-98 Oct-98 MULTIPLE OF BOND YIELD TO EQUITY EARNINGS YIELDS Ap
Slide 32: ASX200 Industrial valuation of equities relative to bonds
0.4 0.6 06 0.8 1 1.2 1.4 1.6 Au ug-90 Fe eb-91 Au ug-91 Fe eb-92 Average Au ug-92 Fe eb-93 -1 Std Dev Au ug-93 Fe eb-94 Au ug-94 Fe eb-95 EQUITIES RELATIVELY OVERVALUED EQUITIES RELATIVELY UNDERVALUED Au ug-95 Fe eb-96 Au ug-96 Fe eb-97 Au ug-97 Fe eb-98 Au ug-98 Fe eb-99 MULTIPLE OF BOND YIELD TO E
Slide 33: Rolling 10yr returns based on lowest daily closing price
24% 5 O Rolling 10yr based on lowest daily closing price 20% 4 16% + 12% 4 fe) 8% - 4h 0% - EE Nov 20 4% 1895 1907 1919 1931 1943 1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Note: 1895 - 1946 based on year-end prices, 1947 onwards based on quar
Slide 34: Shareholder communication
SHAREHOLDER COMMUNICATION Website updated www wilsonassetmanagement com au www.wilsonassetmanagement.com.au Audio cast - fortnightly Presentations Investor Report 34
Slide 35: Questions?
QUESTIONS? 35
Slide 36: Disclaimer
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 and WAM Capital Ltd, Wilson Investme