Over four decades in financial markets, one of my greatest passions has centred on identifying, investing in and closing discounted asset opportunities.
During this time, I have developed a disciplined investment process focused on my preferred investment vehicles, listed investment companies (LICs). Our eighth LIC, WAM Strategic Value Limited (ASX: WAR) will offer investors a dedicated vehicle to execute this investment strategy. Essentially, we are focused on identifying and investing in $1 of assets for 80c. This primary focus will be complemented by other market mispricing opportunities arising within the corporate sector, such as takeovers or capital raisings, where we are able to utilise our position as an institutional investor responsible for more than $4 billion of shareholder capital.
WAM Strategic Value will take advantage of market mispricing opportunities, including securities trading at discounts to assets or net tangible assets (NTA), corporate transactions and dividend yield arbitrages with franking credit benefits. Our experience and expertise in managing closed-end vehicles provides us with a unique methodology to identify and benefit from LIC and listed investment trust (LIT) market mispricing opportunities and engage proactively with boards, management teams, investors and other stakeholders.
I am excited to manage the investment portfolio, as Lead Portfolio Manager, with support from the broader Wilson Asset Management investment and management team. Together, the investment team and I have over 190 years’ collective investing experience gained across Australian and global listed equities and alternative assets. Our investment team is supported by 27 high-performing professionals who work across the corporate affairs, finance and operations teams. They are tasked with delivering shareholders transparency, insights and experiences, adding discipline, depth and reach to Wilson Asset Management’s core business and supporting the WAM Strategic Value investment strategy.
Case study: AMP Capital China Growth Fund
The case of the AMP Capital China Growth Fund (AGF) resulted in a substantial return on Wilson Asset Management’s investment, after a period of actively investing and investors agitating for change on behalf of all unitholders.
AGF was underperforming relative to its benchmark, which prompted key investors to call for AGF to be wound-up in 2015. This triggered an announcement in July 2015 from AGF’s responsible entity (RE), AMP Capital Funds Management Limited, confirming it would conduct a strategic review of the fund.
In October 2015, AGF announced that it had received a notice of meeting and explanatory memorandum from institutional asset management company LIM Advisors, a substantial shareholder, to call an extraordinary general meeting (EGM) of unitholders regarding the fund’s discount to NTA. This meeting was ultimately adjourned to allow the RE to continue its activities and enhancements to the fund under the strategic review, in order to close the discount to NTA. AGF subsequently announced an EGM would be held in July 2016, with unitholders given the opportunity to put forward resolutions in relation to the fund. As part of this process, LIM Advisors put forward a resolution to wind up the fund.
We acquired an initial position in AGF in February 2016 at a 22% discount to the 31 January 2016 NTA of $1. Between April and June 2016, we continued buying at an average discount to the underlying NTA of 18.0%. This was ahead of a Supreme Court decision’s ruling in June 2016 that AMPLife, a major investor in the fund and an associated entity of the RE, was not permitted to vote at the EGM, in relation to the LIM Advisors resolution. The inability for AMP Life to vote on the LIM Advisors Resolution at the EGM ultimately resulted in unitholders, excluding AMP Life, voting to wind-up the fund.
During the wind-up, we received distributions of $1.02 per AGF unit held. The wind-up of the fund enabled us to realise a 30.4% return on the initial investment and all of AGF’s investors were able to realise the true value of the fund as a result.
Becoming a WAM Strategic Value shareholder
WAM Strategic Value aims to deliver strong risk-adjusted returns derived from a portfolio primarily composed of discounted asset opportunities selected using the proven market-driven investment process we have developed over more than two decades.
We have received a significant interest from our shareholders and a numbers of interesting questions. We look forward to answering these questions and more in a webinar on Thursday 13 May at 3:30pm (Sydney time.) If you are interested in finding out more, sign up to receive WAM Strategic Value updates and webinar details.
The offer will open on 24 May 2021 and is expected to close on 10 June 2021. The terms of the offer for shares in WAM Strategic Value are contained in a prospectus issued by WAM Strategic Value dated, and lodged with ASIC, 7 May 2021. A copy of this prospectus is available is available at wilsonsassetmanagement.com/strategicvalue. You should consider this prospectus when deciding whether to participate in the IPO and acquire shares in WAM Strategic Value. Anyone who wants to acquire shares will need to complete the application form that will be in or will accompany the prospectus.
