This has been a pet hate of mine PC, because Geoff has been doing the 80c in the dollar thing through WAA for years, and WAM holds everything that WAA (and WAX) hold except in much larger quantities (because WAM Capital is a much bigger fund than WAM Active or WAM Research).  My view, which I expressed last year to their CEO Kate Thorley, was that Geoff's "babies" like TGG and PIA (formerly HHV) have dragged down the performance and profit reserves of WAA and WAM which have the lowest profit reserves of all the Wilson managed funds.  It's chalk and cheese when you compare them (WAA & WAM) to WAX (WAM Research), which is full of companies chosen 100% due to research (and by their lead PM Oscar Oberg), which has a huge profit reserve and way better performance.  In that light, I think it would be great to spin all that stuff into a separate LIC.  The stuff he would target would be other closed end funds (such as LICs) trading at a 20%+ discount to NTA/NAV where he believed he could either close the gap or takeover the fund.  This was his original investment thesis with TGG and PIA (when PIA were HHV) and neither of those investments worked out very well when you look at the number of years they have held them and the annual returns they have generated (negative returns in some years).  Lately he has been getting involved in other companies that held a lot of cash and were trading at a good discount to asset value.  I can understand the rationale, but I don't think those companies belong in WAM (WAM Capital).  I'd like to see them in an 8th LIC, and I would avoid it. 

Disclosure:  Of the WAM Funds managed LICs, I currently hold WGB, having sold all of my WMI last week after they went ex-div and did not drop.

Thanks for the input Bear,

IMO WAM capital is now too big to efficiently invest in anything other than large cap companies efficiently. I think it needs to become what this proposed 8th LIC will be and possibly merge with WAA and/or WAX. There is so much overlap in mandates of WMI, WLE WAX and WAM that is mostly hiden behind fund manager jargon. The combined entity would have some serious weight behind it and would help clean up some of the absolute crap listed in LIC land. 

Agreed that it will target close ended funds. I wonder if it will be confined the the ASX or not?

Geoff Wilson is already a board member, backer, and investor in Miles Staude's Global Value Fund (ASX: GVF), based out of London which does exactly what you are describing on a global scale - mostly in the US, UK & Europe.  I hold shares in GVF also.  I don't think Geoff would copy Miles' business plan considering Geoff is a GVF board member (director).  I think he would just concentrate on Aussie CEFs and cashbox companies trading at significant discounts to asset value.

It's worth noting that WAM Capital does not hold ANY shares that are not held in one or more of their other LICs.  Everything WAM Capital holds is replicated in smaller quantities in one or more of their other LICs.  Originally there was WAM, WAX and WAA and WAX was and is 100% research driven, WAA is 100% Active/Market Driven investments, and WAM Capital held holds everything that both WAA and WAX hold and was traditionally described as 50/50 Research/Market driven, although I'm sure the percentages move around a lot.  It got a little less easy to understand as they added WLE and WMI.  And WAM does not hold anything that WGB holds or WMA either as far as I know, but I have asked Geoff and Kate about WAM Capital and they have confirmed that as their flagship fund, WAM Capital only holds shares in companies held in the other LICs (WAX, WAA, WMI & WLE) but in larger quantities.  The exception might be WLE, because it's pretty large itself, so they could hold similar or smaller positions in WAM Capital to what WAM Leaders holds, or else no stock in many of the companies that WAM Leaders holds, but WAM Capital definitely holds everything that WAM Active (WAA) and WAM Research (WAX) hold.  This was very evident back when they used to list their top 20 in order of weightings for each fund.  Less obvious now because they're all in alphabetical order, but you can still see the overlap there, and can usually work out which of the WAA and WAX holdings are their larger positions by which ones also make it into the WAM top 20.

I should add - on your size and lack of effectiveness point, I think that would be why WAM Capital probably does not hold any or much of many of WAM Microcap's (WMI's) positions, because WAM Capital is now too big to get in and out of the sort of companies that WMI holds without moving the share price by quite a bit, which I think was one of the reasons why WMI was created (other than to produce more fee income).  WMI is the only fund that they do not seem hell-bent on expanding to a larger size.  They understand that to be effective, WMI has to stay reasonably small, because of their target companies and the lack of liquidity with many of them.  They would love to increase the size of WAA (WAM Active), their smallest fund, and I've heard that directly from Kate Thorley, however it was trading at an NTA-discount for years and that made it hard to do rights issues or SPPs considering Geoff is a vocal opponent of any fund diluting existing shareholders by raising capital when the fund was trading at a NTA-discount.  Kate suggested that one avenue to grow WAA (which she described as sub-scale with an unacceptably high MER because of its small size) would be to take over another fund that could be rolled into WAA.  We shall see.  I know they're not happy having WAA as a sub-$100m LIC (currently worth $76m), but they're quite comfortable with WMI being in that $400m to $500m range (currently around $459m).

Hi Bear,

Good point regarding GVF. 

Perosnally I can't see how WAM, WAX,WAA,WMI and WLE can all co exist without eventually returning to mediocrity performance wise (if they aren't already). 

Agreed regarding the new fund - my view was that the way to make money of it might be to anticipate the companies that it will target upon it's listing.

Also - I reckon Wilson Asset Management (the manager itself) is priming itself for an IPO.....

Good call there PC.  I think you could be right about that IPO.  Not sure I would participate in it if it happened.  Sometimes funds are more profitable than fund managers.  There are exceptions of course, like Magellan (MFG) in the past few years, although not so much more recently since they started getting too generous with their unitholders.  I know that WAM Funds do generate a lot of fees.  Could be one to watch if they do IPO - but I don't think I'd get involved in the IPO itself.

Yep I'd steer clear unless the valuation was extremely compelling. The one it would have going for it is that all of its funds are closed end LIC's ( I think they have an off market fund as well but I know very little about it) so revenue would be very resilient.