WAM Active Ltd. · ASX:WAA
WAM Active — Investor Presentation (May 2010)
37 slides from WAM Active's investor presentation, May 21, 2010
Slide 1: WAM Active Limited Presentation May/June 2010
WAM ACTIVE LIMITED (WAA) For personal use only A.B.N. 49 126 420 719 Presentation May/June 2010
Slide 2: What is WAM Active (WAA)
What is WAM Active (WAA) For personal use only • An active investor in listed Australian equities • High turnover, actively managed portfolio • Concentrates on: – Corporate transactions – Capital raisings (168 in last 10 months) – Block trades – Discount to assets arbitrage – Franking credit arbitra
Slide 3: Objectives
Objectives For personal use only • Preserve shareholders capital • To payout a consistent and growing stream of fully franked dividends • To achieve capital growth with minimum risk • To grow the fund 3
Slide 4: What WAA delivers
What WAA 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 inappropriate times 4
Slide 5: Risk Profile
Risk Profile For personal use only • Reverts to cash if no trade identified. The fund has averaged 55.1% of cash since Percentage in Cash listing 100.0% Cash was 21.0% in Aug 2009, 90.0% • cash 61.5% April 2010 80.0% 70.0% • Usual purchased positions 6%, 60.0% 4% and 2% 50.0% • Can short sell 40.0%
Slide 6: Markets
For personal use only Markets 6
Slide 7: 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 110.0% 108.0% 106.0% 104.0% 102.0% 100.0% 98.0% Australian market has 96.0% underperformed the US market in calendar year 2010 to date. This is a 94.0% direct result of rising interest rates in 92.0% Australia. 90.0% Jan‐10 Feb‐10 M
Slide 8: S&P/ASX Industrials Index vs Resources Index
S&P/ASX 300 Industrials Index vs S&P/ASX 300 Resources Index For personal use only Index 1.05 1.03 1.01 0.99 0.97 0.95 0.93 0.91 The Resources sector has 0.89 been more volatile in 0.87 calendar year 2010 to date. 0.85 Jan‐10 Feb‐10 Mar‐10 Apr‐10 May‐10 ASX 300 Industrials ASX 300 Resources
Slide 9: S&P/ASX Small Ordinaries Index
S&P/ASX Small Ordinaries Index For personal use only Index 4100 3900 3700 3500 3300 The small companies index has not risen since August 2009. 3100 2900 2700 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10 Mar‐10 Apr‐10 Small Ordinaries
Slide 10: 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 before a new bull market begins. 900 700 500 1985 1986 1987 1989 1990 1991 1993 1994 All Ordinaries 1985 ‐ 1994
Slide 11: S&P/ASX All Ordinaries Index 1969-1979
S&P/ASX All Ordinaries Index 1969 - 1979 For personal use only Index 500 450 400 350 300 250 200 150 It can take up to a decade before a 100 new historical high is reached. 50 0 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 All Ordinaries 1972 ‐ 1982
Slide 12: S&P/ASX All Ordinaries Index from 2005 to date
S&P/ASX All Ordinaries Index from 2005 to date For personal use only Index 7000 We are currently only 2½ 6500 years into current bear market. 6000 5500 5000 4500 4000 3500 3000 Jan‐05 Jul‐05 Jan‐06 Jul‐06 Jan‐07 Jul‐07 Jan‐08 Jul‐08 Jan‐09 Jul‐09 Jan‐10 All Ordinaries from 2005
Slide 13: S&P/ASX Prospective P/E Valuation
S&P/ASX 300 Prospective per Valuation For personal use only Price to Earnings ratio 21 20 19 18 17 High (+1Std Dev) 16 15 14 AVERAGE 13 12 Valuations for the Australian Lower (-1 Std 11 sharemarket look cheap BUT expect 10 2011 earnings to be downgraded. 9 8 Source: GSJBW Research estimates
Slide 14: S&P/ASX Industrials Index
S&P/ASX 300 Industrials Index For personal use only Index 10000 The Australian Industrial Index is only 10% higher over the last 10 years. 8000 6000 4000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ASX 300 Industrials
Slide 15: S&P/ASX Small Industrials Index
S&P/ASX Small Industrials Index For personal use only Index 4000 Meanwhile, the Small 3500 Industrial Index has fallen approximately by 20% over last 10 years. 3000 2500 2000 1500 1000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Small Industrials
Slide 16: Financial Highlights
For personal use only Financial Highlights 16
Slide 17: Financial Year to April 2010
Financial Year to 30 April 2010 For personal use only 2010 Total Income $5.2m Operating profit after tax $2.8m Operating profit per share 18.1c 17
Slide 18: Performance
Performance For personal use only % 50.0 40.0 30.0 20.0 10.0 0.0 -10.0 -20.0 -30.0 -40.0 -50.0 -60.0 WAM Active Limited - Gross Portfolio before all expenses, fees, taxes and dividends S&P/ASX All Ordinaries Accumulation Index 18
Slide 19: Dividends
For personal use only Dividends 19
Slide 20: Dividends
Dividends For personal use only • Government reform due June 2010 - will change the way dividends are paid • Dividends will no longer be affected by movement in value of the portfolio • Dividends can be paid if the company is solvent • WAA has franking credits of $176k or 2.6c per share 20
Slide 21: Dividends Chart
Dividends Chart For personal use only 3.5 3 2.5 2 1.5 1 0.5 0 * Interim dividend only 21
Slide 22: NTA and Share Price
For personal use only NTA and Share Price 22
Slide 23: NTA & Share Price History
NTA & Share Price History For personal use only 1.25 1.15 1.05 0.95 0.85 0.75 0.65 NTA After-tax Share price 23
Slide 24: Option Issue
For personal use only Option Issue 24
Slide 25: Option Issue
Option Issue For personal use only • 1 for 1 option issue strike price at $1.15, expires 30 April 2011 (ASX:WAAO) • NTA after tax as at the end of April $1.16 • Looking to increase the size of the business • Expect future option issues 25
Slide 26: Stock Selection
For personal use only Stock Selection 26
Slide 27: Best Performing Stocks months to April 2010
Best Performing Stocks 10 months to 30 April 2010 For personal use only Unrealised/Realised Code Company % Gains MCP McPherson’s Ltd $445,924 168% VBA Virgin Blue Holdings Ltd $360,774 108% FKP FKP Property Group $320,474 73% FXL Flexigroup Ltd $299,835 89% NAB National Australia Bank Ltd $284,090 2
Slide 28: Worst Performing Stocks months to April 2010
Worst Performing Stocks 10 months to 30 April 2010 For personal use only Unrealised/Realised Code Company % Losses CPR Clive Peeters Ltd ($97,879) -47% MGX Mount Gibson Iron Ltd ($70,769) -19% MVU MatrixView Ltd ($68,521) -90% PIH Prime Infrastructure Group ($68,139) -22% BAU Bauxite Resources Ltd (
Slide 29: Stock Stories
Stock Stories For personal use only • Clive Peeters Ltd (CPR) • Credit Corp Group Ltd (CCP) • Over Fifty Group (OFG) 29
Slide 30: Structural and Regulatory Change
For personal use only Structural and Regulatory Change 30
Slide 31: Regulatory Update
Regulatory Update For personal use only Henry Review • Resource super profits tax (RSPT) • Superannuation levy from 9% to 12% by 2020 • Company tax rate reduced to 28% by 2014 • No change to tax concessions applying to the Not For Profit sector • No change to dividend imputation 31
Slide 32: Positive Structural change for Listed Investment Co's (LICs)
Positive Structural change for Listed Investment Co’s (LICs) For personal use only Our Submission to Treasury • Lodged in support of proposed amendment to Section 254T of the Corporations Act 2001 for dividends to be paid on a “solvency” test rather than a “profit” test. • Potential for LIC’s classe
Slide 33: 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 33
Slide 34: WAMI in the Community
WAMI in the Community Wilson Asset Management proudly support the following For personal use only organisations: 34
Slide 35: Shareholder Communication
Shareholder Communication For personal use only We value your feedback! Website www.wilsonassetmanagement.com.au Audio cast Presentations Investor Report Monthly Investment Update & NTA announcements 35
Slide 36: Questions?
For personal use only QUESTIONS? 36
Slide 37: Disclaimer
Disclaimer This presentation has been prepared for use in conjunction with a verbal presentation and should be read in that context. For personal use only Information for the graphs, charts and quoted indices contained in this presentation has been sourced from IRESS Market Technology and WAM Capita