WAM Capital Ltd. · ASX:WAM
WAM Capital — Investor Presentation (November 2011)
26 slides from WAM Capital's investor presentation, Nov 16, 2011
Slide 1: WAM Capital Limited (WAM)
WAM Capital Limited (WAM) For personal use only
Slide 2: Unchartered Waters
Unchartered Waters For personal use only • The European debt crisis continues to create uncertainty • Widespread sovereign and bank vulnerability in Europe • Some European Governments unable to access capital markets • European stability funds not large enough • Emergence of so called “Zombie Banks”
Slide 3: Current State of Play
Current State of Play For personal use only • Governments in the developed world have to implement austerity measures • The US economy appears to be recovering slowly • Over 25% of US homeowners still having negative equity in their homes • China remains strong with inflation appearing to be under c
Slide 4: Our Funds
Our Funds For personal use only WAM Capital (WAM) WAM WAM Active Research (WAA) (WAX) Market Research Driven Driven 4
Slide 5: Investment Process: Research Driven
Investment Process “Research Driven” For personal use only Identify Company Undertake Detailed Research Visit with Management – 700+ companies p.a. Rank the Company (Rating template) Catalyst identified or occurs Buy or short sell shares 5
Slide 6: Investment Process: Market Driven
Investment Process “ Market Driven” For personal use only We scour the market for trading opportunities: • Initial public offerings • Capital raisings • Block trades at discount • Takeovers • Listed Investment Companies (LIC) discount to NTA • Earnings momentum / surprise • Short selling • Discount
Slide 7: Performance to October 2011
Performance to 31 October 2011 For personal use only S&P/ASX Annualised Gross All Ordinaries Outperformance Performance Portfolio* Accum. Index 1 year +7.2% -4.0% +11.2% 3 years +19.9% +7.6% +12.3% 5 years +8.2% +0.1% +8.1% 10 years +15.3% +7.5% +7.8% Since inception +18.2% +7.5% +10.7% 7
Slide 8: Portfolio as at October 2011
Portfolio as at 31 October 2011 For personal use only Research Driven: Market Driven: % Gross % Gross Company Company Assets Assets RKN Reckon Ltd 4.4% CNA Coal & Allied Industries Ltd 10.1% MMS McMillan Shakespeare Ltd 2.3% HUN Hunnu Coal Ltd 6.3% Signature Capital SGI 3.7% MYS MyState Ltd 1.6% Inv
Slide 9: Market Driven - Coal & Allied Industries Ltd (CNA)
Market Driven - Coal & Allied Industries Ltd (CNA) For personal use only • Bought over 3 periods ¾ Initial approach (0.5%) ¾ Bid increase (1%) ¾ De-risked (8.5%) • 7-9% annualised return. $125 takeover price including a $8 fully franked dividend • Currently 10% of the portfolio. Expect takeover proc
Slide 10: Research Driven - Fantastic Holdings Ltd (FAN)
Research Driven - Fantastic Holdings Ltd (FAN) For personal use only • Manufacturer and retailer of furniture. Major brand - Fantastic Furniture • Interest rate sensitive stock • Retailers are out of favour in the market • Catalyst: Strategic review of portfolio plus further interest rate cuts 10
Slide 11: Financial Year to Date Return
Financial Year to Date Return as at 31 October 2011 For personal use only Gross Portfolio +0.1% Pre-tax NTA per share growth plus dividends -0.9% Share price growth plus dividends -1.8% S&P/ASX All Ordinaries Accumulation Index -4.9% 11
Slide 12: Performance since Inception
For personal use only Index re-based 100 200 300 400 500 600 700 800 ‐ ‐100 Jul‐1999 Dec‐1999 May‐2000 Oct‐2000 Mar‐2001 Aug‐2001 Jan‐2002 Jun‐2002 Nov‐2002 Apr‐2003 Sep‐2003 Feb‐2004 Jul‐2004 Dec‐2004 May‐2005 Oct‐2005 S&P/ASX All Ordinaries Accumulation Index Mar‐2006 Aug‐2006 over 12.25 years Jan
Slide 13: Premium / Discount to NTA
Premium / Discount to NTA For personal use only 30.00% 20.00% 10.00% Discount / Premium 0.00% ‐10.00% ‐20.00% ‐30.00% ‐40.00% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 13
Slide 14: Dividends
Dividends 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 dividends Special fully franked dividends Equal Access Share Buy-Back WAM has franking credits which allows it to pay a dividend equivalent to 7.0 cents per share as at 31 October 2011
Slide 15: Equity Position
Equity Position For personal use only Equity Exposure 100% • Average equity position since Aug 1999: 67.0% 90% • Maximum equity level: 98.0% 80% (Feb 2002) • Minimum equity level: 29.7% 70% (Feb 2009) 60% 50% 40% 30% 20% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 15
Slide 16: Equity Position
Equity Position For personal use only • Cash held on term deposit (TD) with major Australian banks generally staggered up to a maximum maturity of 6 months • A ladder of TD’s is generally created to ensure one TD is maturing on a bi-weekly basis to provide liquidity when required • TD’s can be broke
Slide 17: Current Issues
Current Issues For personal use only • Executive remuneration reports • Interest rates • House prices • US economy • Australian dollar 17
Slide 18: Australian Housing Market
Australian Housing Market For personal use only 18
Slide 19: Looking Ahead
Looking Ahead For personal use only • 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 shape 19
Slide 20: Looking Ahead
Looking Ahead For personal use only • 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 shape Source: Credit Suisse strategy 20
Slide 21: Looking Ahead
Looking Ahead For personal use only • 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 shape Source: Credit Suisse strategy 21
Slide 22: 1970's bear market vs today
1970’s bear market vs today For personal use only 1970’s Today Source: Veritas Securities 22
Slide 23: Analyst EPS
Analyst EPS For personal use only Forecast EPS growth Earnings revisions for year shown (%) FY1 (x) 25 Profile of 2.5 EPSg FY04 FY12 >1= Net 20 forecasts (LHS) 15 2.0 FY05 10 FY13 <1= Net downgrades 1.5 5 FY03 FY06 FY07 FY11 0 1.0 FY08 FY10 -5 0.5 -10 FY09 Profile of FY1 earnings revisions (RHS) -15
Slide 24: Conclusion!
For personal use only Conclusion! 24
Slide 25: Shareholder Communications
Shareholder Communications For personal use only ¾ Website – wamfunds.com.au ¾ Media – Sky Business, Switzer, CNBC, Newspapers ¾ Research Reports – Bell Potter, Patersons & Independent Research Reports ¾ Audio casts – Monthly ¾ Subscribe for weekly emails – includes market wrap ¾ Bi-annual presentat
Slide 26: 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, Macquarie Sec