WAM Capital Ltd. · ASX:WAM
WAM Capital — Investor Presentation (May 2012)
40 slides from WAM Capital's investor presentation, May 7, 2012
Slide 1: WAM Capital Limited (WAM)
WAM Capital Limited (WAM) For personal use only
Slide 2: Executive summary
Executive summary For personal use only • Investment Portfolio has outperformed by 7.5% financial year to 31 March 2012 • Average equity weighting 58% • 10% increase in fully franked interim dividend to 5.5 cents per share • Annualised fully franked dividend yield 6.9%* • Bonus Option issue on a 1 f
Slide 3: Option issue
Option issue For personal use only • Bonus option issue on a 1 for 1 basis • Exercise price: $1.60 • Can exercise at any time up until 31 July 2013 • Options trade on the ASX under the code “WAMO” 3
Slide 4: Option issue: Frequently asked questions
Option issue Frequently asked questions For personal use only Why? • Create value for all shareholders • Increase size of Company - making it more relevant • Continue to grow the Company • Lower the Company’s management expense ratio (MER) How will the money be invested? • In accordance with the exi
Slide 5: Consistent outperformance
Consistent outperformance For personal use only Since Performance 1 Yr 3 Yrs 5 Yrs 10 Yrs Inception as at 31 March 2012 % %pa %pa %pa %pa (Aug-99) WAM Investment +3.2% +22.5% +6.1% +13.5% +18.1% Portfolio S&P/ASX All Ordinaries -6.2% +12.3% -1.8% +7.1% +7.5% Accumulation Index Outperformance +9.4% +
Slide 6: Performance
Performance Financial Year 31 March 2012 For personal use only WAM Investment Portfolio +6.0% WAM Pre-tax NTA per share growth plus dividends +3.2% WAM Share price growth plus dividends +10.2% S&P/ASX All Ordinaries Accumulation Index -1.5% 6
Slide 7: Outperformance since inception
Outperformance since inception For personal use only WAM Capital outperformed the market by 10.6% p.a. over 12½ years Index re-based 800 700 600 500 400 300 200 100 - WAM Capital Ltd - Investment Portfolio (before all expenses, fees, taxes and dividends) S&P/ASX All Ordinaries Accumulation Index 7
Slide 8: Premium / Discount to NTA
Premium / Discount to NTA For personal use only 30% 20% 10% Discount / Premium 0% ‐10% ‐20% ‐30% ‐40% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * * To 20 April 2012 8
Slide 9: Dividend growth
Dividend growth For personal use only 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 9
Slide 10: Discussion - some recent portfolio changes
Discussion - some recent portfolio changes For personal use only New Stocks • Webjet Limited (WEB) • Ethane Pipeline Income Fund (EPX) • Flexigroup Limited (FXL) Disposals • STW Communications Group Limited (SGN) • Macquarie Telecom Group Limited (MAQ) • Coal & Allied Industries Limited (CNA) 10
Slide 11: Contributors / Detractors
Contributors / Detractors For personal use only Best Performing Stocks Financial Year to 31 March 2012 Company Strategy Unrealised/ Realised Gains SGI Signature Capital Investments Ltd Market Driven $1,412,041 AGI Ainsworth Game Technology Ltd Research Driven $1,077,752 BRG Breville Group Ltd Resear
Slide 12: Top Research Driven stocks
Top 10 Research Driven stocks as at 31 March 2012 For personal use only % Gross Company Assets RKN Reckon Limited 2.6% BRG Breville Group Limited 2.1% MMS McMillan Shakespeare Limited 1.7% COF Coffey International Limited 1.4% SKE Skilled Group Limited 1.3% AMM Amcom Telecommunications Limited 1.2%
Slide 13: Ainsworth Game Technology Ltd (AGI) - Research Driven
Ainsworth Game Technology Ltd (AGI) - Research Driven For personal use only • Identified opportunity through broker network • Face to face management meeting at the company’s head office in Silverwater • Company rated highly on our models • Identified catalyst – earnings surprise • Current P/E 13x g
Slide 14: Top Market Driven stocks
Top 10 Market Driven stocks as at 31 March 2012 For personal use only % Gross Company Assets ELI Emerging Leaders Investments Limited 2.4% IBC Ironbark Capital Limited 1.6% CCQ Contango Capital Partners Limited 1.6% CBAPB CBA Perpetual Exc Resale Listed Sec-PERLS IV 1.4% CTN Contango Microcap Limite
Slide 15: Market Driven facts
Market Driven facts For personal use only Financial Year to 20 April 2012 Turnover of invested equity: 6.8 times or 680% Number of trades: 2,183 Individual stocks traded: 254 Takeovers: 37 Placements: 53 Short Sales: 24 15
Slide 16: Clarius Group Limited (CND) – Market Driven
Clarius Group Limited (CND) – Market Driven For personal use only • Idea generated from industry contact • Followed company for years • Stock started to trade below NTA which is comprised of cash and receivables • Current share price: $0.41 vs NTA $0.41. No debt. • Free option on a recovery as downs
Slide 17: Did you know? Apple Inc. – Member of G20?
Did you know?….. Apple Inc. – Member of G20? For personal use only • Market Capitalisation US$600bn. P/E ratio: 13x • Net Cash: $US100bn • Annualised revenue: US$184bn. Annualised profit US$52bn • One third the size of Australia’s GDP • Five times the size of BHP Billiton • Larger than Poland, Belgi
Slide 18: Apple Inc. key metrics relative to Country GDPs
Apple Inc. Key metrics relative to Country GDPs For personal use only Rank Country GDP Rank Country GDP (2011 US$bn) (2011 US$bn) 1 United States 15,065 21 Saudi Arabia 560 2 China 6,988 22 Apple Market Cap 556 3 Japan 5,855 23 Poland 532 4 Germany 3,629 24 Belgium 529 5 France 2,808 25 Taiwan Provi
Slide 19: Looking ahead
Looking ahead For personal use only • Further interest rate cuts • US economic recovery to continue • Global deleveraging cycle to continue • Cautiously optimistic on the Australian equity market 19
Slide 20: Looking Ahead: Forward P/E for the Australian market
Looking Ahead For personal use only Forward P/E for the Australian market • Global deleveraging to continue • Interest rate cuts positive for equity markets • Industrial stocks cheap on a historical basis • Expect continued merger and acquisition activity in Australia with balance sheets in good sha
Slide 21: Summary
Summary For personal use only • Investment team continue to apply rigorous investment process that will identify opportunities and deliver performance • Board is focused on delivering a rising stream of fully franked dividends • Cautiously optimistic on Australian equity market 21
Slide 22: Questions
For personal use only Questions 22
Slide 23: Additional Information
For personal use only Additional Information 23
Slide 24: Who is Wilson Asset Management?
Who is Wilson Asset Management? For personal use only • The WAM Group is the fund manager of three listed investment companies and one unlisted fund, with funds under management of approximately $340 million. • 3 Listed Funds: − WAM Capital Ltd (ASX: WAM) − WAM Research Ltd (ASX: WAX) − WAM Active L
Slide 25: What Wilson Asset Management delivers
What Wilson Asset Management 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 market experience • Closed end fund - avoiding being forced seller and buyer at inappropriat
Slide 26: The Team
The Team For personal use only Geoff Wilson - Chairman / Portfolio Manager Kate Thorley - CEO & Company Secretary Chris Stott - CIO / Portfolio Manager Matt Haupt - Equity Analyst Martin Hickson - Analyst / Dealer Mark Tobin - Assistant Analyst Linda Vo - Senior Financial Accountant Lillie Johnson -
Slide 27: Our Business Model
Our Business Model For personal use only Investment Focus – Growth Companies LIC Structure + Experienced Benefits Team Investment + Flexible + Tight Cost Process Mandate Control Superior Long Term = Performance Record 27
Slide 28: Our Funds
Our Funds For personal use only WAM Capital (WAM) WAM Research WAM Active (WAX) (WAA) Research Market Driven Driven 28
Slide 29: Superior returns from growth companies
Superior returns from growth companies For personal use only • We buy growth companies that trade on low price to earnings multiples (P/E) • We buy when we can identify a catalyst that will increase the valuation • We find these opportunities are more prevalent in the small to mid cap industrials se
Slide 30: Mid to small cap sector benefits
Mid to small cap sector benefits For personal use only • Small cap value has outperformed all other sectors* • Under researched • Access to management - ability to build strong relationships • Life cycle of the business - ability to grow at a faster rate than larger companies • Higher risk and highe
Slide 31: Smaller and more rewarding
Smaller and more rewarding For personal use only *Source – The New York Times 31
Slide 32: LICs are superior investment vehicles
LICs are superior investment vehicles For personal use only Listed Investment Companies are very attractive investment vehicles • LICs have outperformed the market ^ • Studies show LICs outperform managed funds*^ • Closed pool of capital – never forced seller or buyer • Provide consistent flow of fu
Slide 33: LICs outperform the share market over the long term
LICs outperform the share market over the long term For personal use only * Source: Morgan Stanley Smith Barney 33
Slide 34: WAM Funds outperformance vs ASX LIC Index
WAM Funds outperformance vs ASX LIC Index For personal use only *Source: Iress 34
Slide 35: Investment objectives
Investment objectives For personal use only The investment objectives of WAM Capital are: • To deliver a rising stream of fully franked dividends; • To provide capital growth; and • To preserve capital. 35
Slide 36: Robust investment process: Research Driven
Robust investment process “Research Driven” For personal use only Identify Company Undertake Detailed Research Visit with Management – 800+ companies p.a. Rank the Company (WAM’s unique rating template) Catalyst identified or occurs Buy or short sell shares 36
Slide 37: Investment process: Market Driven
Investment process “ Market Driven” For personal use only We scour the market for opportunities: • Initial public offerings • Capital raisings • Block trades • Oversold position • Takeovers • Listed Investment Companies (LIC) discount to net tangible assets (NTA) • Stocks trading at a discount to th
Slide 38: External research coverage
External research coverage For personal use only Research Houses covering listed investment companies & WAM Capital: - Bell Potter Securities - Morgan Stanley Smith Barney - Zenith Partners - Independent Investment Research - APAM LIC Research - Evans & Partners - JBWere - Morningstar - E.L.&C. Bail
Slide 39: Investor communications
Investor communications For personal use only ¾ Website – wamfunds.com.au ¾ Subscribe for weekly emails – includes market update ¾ Audio casts – Monthly ¾ Media – Sky Business, Switzer, CNBC, Newspapers, Industry Magazines ¾ Half yearly Investor Newsletters ¾ Half yearly Results and Media Release ¾
Slide 40: 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, Credit Suisse