WAM Strategic Value Lead Portfolio Manager and Wilson Asset Management Chairman and Chief Investment Officer Geoff Wilson AO shares an update on the listed investment company sector in Australia and globally amid a year of increased equity market volatility for investors, highlighting a number of opportunities that the investment team have taken advantage of recently. Geoff also discusses the recently announced increased fully franked final dividend and the investment portfolio’s cash position.
GEOFF WILSONWelcome to WAM Vault. It is great to be updating you all again on our eight listed investment companies (LIC) and we are looking forward to seeing you all on the road again next year. We value the opportunity to see and meet you all face-to-face again in May on our National Roadshow. Remember, these are your companies. As you all know you are the shareholders and owners of these companies and we manage them on your behalf and thank you very much for giving us that opportunity.
I’m going to share an update on WAM Strategic Value today which trades under the ASX ticker WAR. As Lead Portfolio Manager, I work closely with our investment team as well as Chief Financial Officer Jesse Hamilton and Investment Specialist Martyn McCathie to implement our investment process which takes advantage of market mispricing opportunities including companies trading at a discount to their assets, corporate transactions and various dividend yield plays. Our investment portfolio has a focus on LIC and listed investment trusts (LIT) trading at a discount to their underlying net tangible assets (NTA).
Throughout the year as monetary policy tightening continued across the globe, fears of a slow down in economic growth, inflation and interest rate rises are weighing on investment sentiment leading to increased equity market volatility for all investors. This increased volatility affect the LIC sector broadly during the year as the underlying investment portfolios of our holdings were impacted and the average discount to NTA in the LIC sector widened. The global LIC sector more specifically has been experiencing share price pressure with a general widening of the share price discount to NTA. WAM Strategic Value’s investment portfolio exposure to global LICs and LITs provided a positive performance despite the average discount to NTA in the sector expanding to 18.8% as of the 30th June 2022.
A number of global LICs and LITs ended the quarter with positive share price performance, however, closed substantially below their mid quarter highs as shareholders continue to endure share price volatility. We’re pleased with the progress to date in what has been a very difficult period for equities. This year, there’s been a number of opportunities in the Listed Investment Company and Listed Investment Trust universe. More recently, we have taken advantage of an acquisition that WAM Leaders made by a scheme of arrangement with AEG, as well as some direct investment opportunities and one we have been investing in and are very happy with is AMP.
WAM Strategic Value continues to invest in discounted asset opportunities and expects to benefit from these as the market volatility subsides and the share price discounts of underlying investments narrow over time. Our cash position is a healthy 36% and we are perfectly positioned for opportunities as they present themselves. In August, we were pleased to announce a fully franked final dividend of 2¢ per share, a 100% increase on the fully franked interim dividend. As we continue to grow our profit reserve we intend to continue providing an increased stream of fully franked dividends to our shareholders. Jesse, Martyn, the team and I will continue to identify undervalued opportunities that fit our process and provide returns to our shareholders over time. Thank you again for watching WAM Vault and for your continued support of WAM Strategic Value.
