WAM Capital Ltd. · ASX:WAM
WAM Capital — Investor Presentation (October 2010)
31 slides from WAM Capital's investor presentation, Oct 13, 2010
Slide 1: WAM Capital Limited Presentation October 2010
WAM CAPITAL LIMITED For personal use only (WAM) A.B.N. 34 086 587 395 Presentation October 2010 1
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 g market experience p • 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 29.76% over the last 11 years • Cash was 29.1% in Aug 2009, Percentage cash 46.9% at August 2010 in Cash 70.00% • Closed end fund – avoids major j 60 00% 60.00% redemptions when market is falling 50.00% 40.00% • Highly g y diver
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 1.1 1.05 1 S&P 500 All Ordinaries 0.95 Australian market has 0.9 underperformed the US market in calendar year 2010 to date. This is a direct result of rising interest rates in Australia. 0 85 0.85 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10
Slide 7: S&P/ASX Small Ordinaries Index
S&P/ASX Small Ordinaries Index For personal use only Index 2800 2700 2600 2500 Small Ordinaries 2400 Small Ordinaries Index is up 20.5% since it bottomed in July 2300 2200 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10 Jun‐10 Jul‐10 Aug‐10 Sep‐10 Oct‐10 7
Slide 8: 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 begins. 700 500 1985 1986 1987 1989 1990 1991 1993 1994 8
Slide 9: S&P/ASX 300 Prospective Price to Earnings Ratio
For personal use only 8 10 12 14 16 18 20 Aug-90 22 ratio Jun-91 Price to earnings Apr-92 Feb-93 Dec-93 Source: GS&PA Research estimates Oct-94 valuation Aug-95 Jun-96 +1 Std Dev Apr-97 Feb-98 Dec-98 -1 Std Dev Oct-99 Average: Aug-00 Jun-01 Apr-02 Feb-03 Dec-03 Oct-04 Aug-05 Jun-06 Apr-07 S&P/ASX 30
Slide 10: S&P/ASX Small Industrials Index
S&P/ASX Small Industrials index For personal use only Index 4500 4000 3500 Meanwhile, the Small Industrial Index has fallen approximately 20% over the l t 10 years last 3000 2500 Small Industrials 2000 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 10
Slide 11: Financial Highlights
For personal use only Financial i i l Highlights 11
Slide 12: Financial Year to August 2010
Financial Year to 31 August 2010 For personal use only 2010 Total Income $6.8m Operating profit after tax $4.7m Operating profit per share 4.5c 12
Slide 13: Performance at August 2010
Performance at 31 August 2010 For personal use only S&P/ASX Annualised All Ords. Gross Portfolio* Outperformance performance Accumulation Index I year +15.9% +2.7% +13.2% 3 years +1.5% -6.9% +8.4% 5 years +11.7% +4.4% +7.3% 10 years +16.8% +7.4% +9.4% Since inception +18.9% +8.0% +10.9% * The change
Slide 14: Portfolio Structure
Portfolio Structure For personal use only As at 31 August 2010 Investment Type $m % Listed Equities 93 43 93.43 53 1 53.1 Term Deposits and Cash 82.49 46.9 g Portfolio Total Long 175.92 100.% Short Portfolio (3.83) No. Ordinary Shares on issue 103,931,192 14
Slide 15: Dividends
For personal use only Dividends 15
Slide 16: Dividends
Dividends For personal use only • Government reform in June 2010 - has changed the way dividends are paid • Dividends no longer 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 1.94c per s
Slide 17: 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 Dividends Special Dividends Equal Access Share Buy‐Back Source: ASX 17
Slide 18: 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% 18
Slide 19: Stock Selection
For personal use only Stock Selection 19
Slide 20: Top Stocks as at August 2010
Top 10 Stocks as at 31 August g 2010 For personal use only % FY10 Market % of Change P/E Value Gross Average Code Company Ratio* $m Assets Cost RKN Reckon Limited 8.7 5.1% 60.2% MMS McMillan Shakespeare Limited 6.0 3.5% 44.5% HSP Healthscope Limited 5.0 2.9% 5.4% RHG RHG Limited 3.7 2.2% 7.4% Mitche
Slide 21: Best Performing Stocks
Best Performing Stocks 2 months to 31 August g 2010 For personal use only Unrealised/Realised Code Company Gains % $ MMS McMillan Shakespeare Limited 1,276,249 29.6% MCU Mitchell Communication Group Limited 996,159 34.2% RKN Reckon Limited 892 115 892,115 9 3% 9.3% ITX ITX Group Limited 505,881 38.9
Slide 22: Worst Performing Stocks
Worst Performing Stocks 2 months to 31 August g 2010 For personal use only Unrealised/Realised Code Company Losses % $ TSM ThinkSmart Limited (421,404) -29.8% 29.8% IRE Iress Market Technology Limited (253,441) -8.0% DJS David Jones Limited (148 756) (148,756) 16 0% 16.0% DYE Dyesol Limited (148,283
Slide 23: OrotonGroup Limited - ORL
OrotonGroup Limited - ORL For personal use only • Wholesale and retailer of clothing, leather and fashion accessories. Major brands are Oroton and Polo Ralph Lauren. • Return on Equity (ROE): 75%, • Price P i tto E Earnings i (P/E) (P/E): 12.3x 12 3 • In portfolio as a Research driven stock, but thi
Slide 24: Webfirm - WFM
Webfirm - WFM For personal use only • Full service digital media company. Main product is an online auction ti based b d technology t h l for f classified l ifi d publishers bli h • Capital raising done in early September at 13 cents, share price was 15 cents,, discount of 13.3% p • Capital raised t
Slide 25: Structural and Regulatory Change
For personal use only Structural and Regulatory Change 25
Slide 26: 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 p p Review)– ) very y positive p for LICs • LICs will have a level playing field from 2012 • LICs are very attractive inv
Slide 27: 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 27
Slide 28: WAMI in the Community
WAMI in the Community For personal use only Wilson Asset Management proudly support the following organisations: 28
Slide 29: Shareholder Communication
Shareholder Communication For personal use only W value We l your feedback! f db k! Website www.wilsonassetmanagement.com.au Audio casts Presentations Investor I t Report R t Monthly Investment Update & NTA announcements 29
Slide 30: Questions?
For personal use only Questions? 30
Slide 31: Disclaimer
Disclaimer For personal use only 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 Capita