WAM Capital Ltd. · ASX:WAM
WAM Capital — Investor Presentation (November 2008)
44 slides from WAM Capital's investor presentation, Nov 19, 2008
Slide 1: WAM Capital Limited Presentation November 2008
WAM CAPITAL LIMITED For personal use only A.B.N. 34 086 587 395 PRESENTATION NOVEMBER 2008
Slide 2: Objectives
WAM CAPITAL LTD For personal use only OBJECTIVES • High Real Rate of Return • Preserve Capital • Strong Dividend Flow
Slide 3: How Do We Pay Dividends?
HOW DO WE PAY For personal use only DIVIDENDS? • Current pre-tax NTA 128 128.38c 38c • FY2009 current losses $14.0m (or 13.2c) • Need a return of over 12% as at 31 October 2008 to commence paying a dividend • Dividends are only payable from retained earnings i or currentt year profits fit off the th
Slide 4: Balance Sheet as at October 2008
BALANCE SHEET as at 31 October 2008 For personal use only (after the market downturn) Net Assets $135,868,488 Shareholder's Equity $151,927,454 Accumulated Losses ($2,009,818) Current Year Losses ($14,049,148) Total Equity $135,868,488
Slide 5: Portfolio Structure
PORTFOLIO STRUCTURE For personal use only As at 31 As at As at December 2007 31 May 2008 31 October 2008 $m % % $m % % $m % % Research 49 41% 40 38% 22 48% Trading 70 59% 66 62% 24 52% Long Portfolio 119 100% 62% 106 100% 66% 46 100% 36% Short Portfolio - - (2.6) -1% - - Fixed Interest and Cash 72 3
Slide 6: Discount to NTA
DISCOUNT TO NTA For personal use only As at 31 Oct 2008 Cents Discount Pre-tax Pre tax NTA 128 4* 128.4 27 5% 27.5% After-tax NTA 127.8* 27.2% Share Price 93.0** * Includes 10.1 cents per share in tax assets and before the payment for the equal access share buy-back ** As at close of trading 14 Nove
Slide 7: Equal Access Share Buy-Back
EQUAL Q ACCESS SHARE For personal use only BUY-BACK Announcement of buy-back 28-Aug-08 Close date 30-Oct-08 Payment date 7-Nov-08 Total 3,373,557 ordinary shares (55% take up) at $1 $1.38 38 per share for a total consideration of $4,655,509
Slide 8: Top Stocks as at October 2008
TOP 10 STOCKS For personal use only as at 31 October 2008 % of % Change FY09 P/E Market Gross Average Code Company Ratio Value $m Assets Cost RKN Reckon Limited 8.8* $5.14 4.1% 21.1% MLB Melbourne IT Limited 6.6 $2.75 2.2% 18.8% MMS McMillan Shakespeare Ltd 6.2* $1.83 1.5% 3.7% CBA C Commonwealth lt
Slide 9: WAM Capital Premium/Discount to NTA
WAM Capital Premium/Discount to NTA For personal use only 40.00% 30.00% 20.00% 10.00% 0 00% 0.00% -10.00% -20.00% -30.00% -40.00%
Slide 10: Performance History
PERFORMANCE HISTORY For personal use only 600 550 500 450 400 % Perfformance 350 300 250 200 150 100 50 - -50 August 1999 - October 2008 WAM Capital Ltd Gross Portfolio before all expenses, fees, taxes and dividends All Ordinaries Accumulation Index
Slide 11: NTA & Share Price History
WAM Capital Limited NTA & Share Price History For personal use only 2 5000 2.5000 2 0000 2.0000 1.5000 1.0000 0.5000 0.0000 NTA Pre-tax NTA After-tax Share Price
Slide 12: General Market Slides
For personal use only GENERAL MARKET SLIDES The following charts show the Australian andd US marketsk t are att the th cheapest h t in i many years. Both markets have fallen close to 50% in value at a time when interest rates are declining.
Slide 13: ASX200 Valuation of Equities Relative to Bonds
For personal use only 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Aug-90 Feb-91 Aug-91 Feb-92 Aug-92 Feb-93 Aug-93 Feb-94 Aug-94 EQUITIES RELATIVELY OVERVALUED Feb-95 EQUITIES RELATIVELY UNDERVALUED Aug-95 Feb-96 Aug-96 Feb-97 Aug-97 Feb-98 -1 Std Dev Aug-98 Feb-99 Aug-99 Feb-00 Aug-00 Feb-01 Aug-01 Feb-02 MULT
Slide 14: ASX200 Industrial Valuation Relative to Bonds
For personal use only 0.4 0.6 0.8 1 1.2 1.4 1.6 Aug-90 A Feb-91 Aug-91 A Feb-92 Average Aug-92 A Feb-93 -1 Std Dev Aug-93 A Feb-94 Aug-94 A EQUITIES RELATIVELY OVERVALUED Feb-95 EQUITIES RELATIVELY UNDERVALUED Aug-95 A Feb-96 Aug-96 A Feb-97 Aug-97 A Feb-98 Aug-98 A Feb-99 Aug-99 A Feb-00 Aug-00 A F
Slide 15: S&P500 Valuation of Equities Relative to Bonds
For personal use only 0.3 0.5 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.1 Aprr-87 Octt-87 Aprr-88 Octt-88 Aprr-89 Octt-89 Aprr-90 Octt-90 Aprr-91 Octt-91 EQUITIES RELATIVELY OVERVALUED Aprr-92 Octt-92 EQUITIES RELATIVELY UNDERVALUED Aprr-93 Octt-93 Aprr-94 Octt-94 Aprr-95 Octt-95 Aprr-96 Octt-96 Aprr-97 Octt-97
Slide 16: S&P/ASX Small Ordinaries Index
S&P/ASX / Small Ordinaries Index: 1 March 2003 to 31 October For personal use only 2008 4500 4000 3500 3000 2500 2000 1500 1000 500 0
Slide 17: S&P/ASX All Ordinaries Index
S&P/ASX All Ordinaries Index: 1 March 2003 - 31 October 2008 For personal use only 8000 7000 6000 5000 4000 3000 2000 1000 0
Slide 18: S&P/ASX Small Resources Index
S&P/ASX Small Resources Index: 1 March 2003 - 31 October 2008 8000 For personal use only 7000 6000 5000 4000 3000 2000 1000 0
Slide 19: S&P/ASX Small Industrials Index
S&P/ASX Small Industrials Index: 1 March 2003 - 31 October 2008 For personal use only 4500 4000 3500 3000 2500 2000 1500 1000 500 0
Slide 20: S&P/ASX Industrials Index
S&P/ASX Industrials Index: 1 March 2003 to 31 October 2008 For personal use only 8000 7000 6000 5000 4000 3000 2000 1000 0
Slide 21: S&P/ASX Financials Index
S&P/ASX Financials Index: 1 March 2003 to 31 October 2008 For personal use only 8000 7000 6000 5000 4000 3000 2000 1000 0
Slide 22: Historical Oil Price - WTI Spot
For personal use only Historical Oil Price - WTI Spot $160 $140 $120 $100 Oil price $80 $60 $40 $20 $0
Slide 23: S&P/ASX All Ordinaries Index 1900 to October 2008
S&P/ASX / All Ordinaries Index: 1 January y 1900 to 31 October 2008 For personal use only 14,000 12 000 12,000 10,000 8,000 6,000 4,000 2,000 0
Slide 24: All Ordinaries: February 1929 to September 1934
All Ordinaries: 28 February 1929 to 30 September 1934 For personal use only 55 50 45 40 35 30 25
Slide 25: Dow Jones: January 1900 to October 2008
DOW JONES: 1 January 1900 to 31 October 2008 For personal use only 14,000 12,000 10,000 8,000 6 000 6,000 4,000 2,000 0
Slide 26: Market Indices: March 2003 to October 2008
Market Indices: 1 March 2003 to 31 October 2008 For personal use only 700 Small Resources 600 Resources Small Ordinaries 500 All Ordinaries Industrials 400 Small Industrials Financials 300 200 100 0
Slide 27: Technology vs Commodities Bubble
Technology vs Commodities Bubble For personal use only 8,000 Nasdaq 7,000 S&P500 6 000 6,000 All Ordinaries Index 5,000 S&P/ASX300 Resources 4,000 3,000 2,000 1,000 0
Slide 28: Company Valuation Slides
For personal use only COMPANY VALUATION SLIDES The following charts show the price being paid id for f Australia’s A t li ’ major j companies i are the lowest in more than 2 decades. While we expect p earnings g to decline significantly g y in the coming 12 months, share prices have already declined
Slide 29: ASX - year forward PER
For personal use only ASX - 1 year fforward d PER 45 40 35 30 25 20 15 10 5 0 Source: Macquarie Research
Slide 30: FXJ - year forward PER
FXJ - 1 y year forward PER For personal use only 35 30 25 20 15 10 5 0 Source: Macquarie Research
Slide 31: LLC - year forward PER
LLC - 1 y year forward PER For personal use only 30 25 20 15 10 5 0 Source: Macquarie Research
Slide 32: NAB - year forward PER
For personal use only NAB - 1 year forward PER 18 16 14 12 10 8 6 4 2 0 Source: Macquarie Research
Slide 33: TAH - year forward PER
For personal use only TAH - 1 year fforward d PER 30 25 20 15 10 5 0 Source: Macquarie Research
Slide 34: TOL - year forward PER
For personal use only TOL - 1 year fforward d PER 40 35 30 25 20 15 10 5 0 Source: Macquarie Research
Slide 35: HVN - year forward PER
HVN - 1 year forward PER For personal use only 50 45 40 35 30 25 20 15 10 5 0 Source: Macquarie Research
Slide 36: SEK - year forward PER
For personal use only SEK - 1 year fforward d PER 50 45 40 35 30 25 20 15 10 5 0 Source: Macquarie Research
Slide 37: What is a Listed Investment Company (LIC)?
What is a Listed Investment C Company (LIC)? For personal use only • Closed Cl d end d pooll off capital it l that th t invests i t in i the th stock t k market Closed end means investors leave the fund by selling shares to another investor rather than redeeming money from the Fund. • No money leave
Slide 38: Pre 1998 Listed Investment Companies
Pre 1998 Listed Investment For personal use only Companies – as at 31 October 2008 Share Pre tax Premium/ Name Code price* NTA Discount Djerriwarrh Investments DJW $ 3.60 $ 3.41 5.57% Argo Investments ARG $ 5.70 5 70 $ 5.44 5 44 4 78% 4.78% AFIC AFI $ 4.24 $ 4.18 1.44% Milton Corporation MLT $ 16.01
Slide 39: Post 1998 Listed Investment Companies
Post 1998 Listed Investment For personal use only Companies – as at 31 October 2008 Share Pre tax Premium/ Name Code price* NTA Discount Aurora Sandringham AOD $ 1.22 $ 1.22 -0.11% AMCIL AMH $ 0.53 $ 0.57 -7.02% WAM Active WAA $ 0.85 $ 0.93 -8.44% Mirrabooka Investments MIR $ 1.40 1 40 $ 1.53 1 53 -
Slide 40: Argo Investments (ARG)
Argo Investments (ARG) For personal use only 40% 35% Premium/Discount to NTA 30% 25% 20% 15% 10% 5% 0% Oct-98 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 -5% -10%
Slide 41: AFIC (AFI)
AFIC (AFI) 35.00% For personal use only 30.00% Premium/Discount to NTA 25.00% 20.00% 15.00% 10 00% 10.00% 5.00% 0.00% Oct-98 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 -5.00% -10.00%
Slide 42: Profit Leverage to a Fall in Revenue
Profit Leverage to a fall in Revenue For personal use only % change in Revenue -5% -10% Revenue (m) $100 $95 $90 Costs (m) $80 $80 $80 Profit (m) $20 $15 $10 % change in Profit -25% -50% Profit Leverage g to a rise in Revenue % change in Revenue +5% +10% Revenue (m) $100 $105 $110 Costs (m) $80 $80
Slide 43: Sector Performance After Market Trough
For personal use only Sector S t Performance P f Sector S t Performance P f Analysis of sector 6 Months after Trough 12 Months after Trough BEST performance in the US 6 and Technology Technology 33.7% 44.0% 12 months after the bottom of Consumer Di Discretionary ti Consumer Di C Discretionary ti the
Slide 44: 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