WAM Active Ltd. · ASX:WAA
WAM Active — Investor Presentation (November 2008)
42 slides from WAM Active's investor presentation, Nov 19, 2008
Slide 1: WAM Active Limited Presentation November 2008
WAM ACTIVE LIMITED For personal use only (WAA) A.B.N. 49 126 420 719 PRESENTATION NOVEMBER 2008
Slide 2: What is it?
WAM ACTIVE LTD For personal use only What is it? • Trader ade for o tax ta purposes pu poses • High turnover, actively managed fund • Concentrates on: – Corporate transactions - takeovers & restructurings – Capital raising – Block trades – Discount i to assets arbitrage bi – Franking credit arbitrag
Slide 3: Objectives
WAM ACTIVE LTD For personal use only OBJECTIVES • Derive an absolute return over the long term • Deliver investors an income stream in the form of fully franked dividends • Preserve the capital of the Company
Slide 4: Performance
WAM ACTIVE LTD For personal use only PERFORMANCE 10 5 0 -5 5 -10 -15 -20 20 -25 -30 -35 -40 WAM Active Ltd - Gross Portfolio before all expenses, fees, taxes and dividends All Ordinaries Accumulation Index
Slide 5: Dividends
WAM ACTIVE LTD For personal use only DIVIDENDS • Intension is to pay an increasing fully franked dividend stream over time. time • Dividends are only payable from retained earnings or current year profits of the company.
Slide 6: Portfolio Structure
PORTFOLIO STRUCTURE For personal use only As at 31 October 2008 Investment Type $m % Listed Equities 2 64 2.64 19 1% 19.1% Term Deposits and Cash 11.18 80.9% Total Long Portfolio 13.82 100.0% Total Short Portfolio (-) -% No. Ordinary Shares on issue 15,400,101 Options on issue ($1 expire 17-06-09) 1
Slide 7: Top Trading Stocks
TOP 10 TRADING STOCKS For personal use only % of % off L Long G Gross Code Company Market Value $ Portfolio Assets CBA Commonwealth Bank of Australia 302,250 11.4% 2.2% NAB National Australia Bank Ltd 269,888 10.2% 2.0% ASX ASX Ltd 255,197 9.7% 1.8% ANZ ANZ Banking Group Gro p Ltd 208 320 208,320 7
Slide 8: WAA NTA vs Putting Money Into Index Fund
WAA NTA vs Putting Money Into Index Fund For personal use only $ 1.05 1 0.95 0.9 0.85 0.8 0 75 0.75 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 After Tax Index NTA WAA NTA
Slide 9: WAA NTA & Share Price History
WAA NTA & Share Price History For personal use only 1.05 1.00 0.95 0.90 0.85 0.80 NTA Pre-tax NTA After-tax Share price
Slide 10: 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 11: 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 12: ASX200 Industrial - Valuation of Equities 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 13: 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 14: S&P/ASX Small Ordinaries Index: March 2003 to October 2008
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 15: S&P/ASX All Ordinaries Index: March 2003 - October 2008
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 16: S&P/ASX Small Resources Index: March 2003 - October 2008
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 17: S&P/ASX Small Industrials Index: March 2003 - October 2008
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 18: S&P/ASX Industrials Index: March 2003 to October 2008
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 19: S&P/ASX Financials Index: March 2003 to October 2008
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 20: 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 21: S&P/ASX All Ordinaries Index: January 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 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: 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