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#Oscar Oberg's Views
Added a week ago


James Marlay from interviews Oscar Oberg, the Lead Portfolio Manager of WAM Capital (WAM), WAM Research (WAX), WAM Microcap (WMI) and WAM Active (WAA) about how he has been positioning those LICs during this period of volatility.

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Last edited 4 months ago

10-Feb-2020:  WAM - interim profit up 168% and 7.75cps FF interim dividend

WAM Capital achieved a 168.4% increase in operating profit before tax to $95.6 million and a 176.9% increase in operating profit after tax to $70.4 million in its FY2020 half year results.  The operating profit for the period is reflective of the solid investment portfolio performance over the period.

The Board of Directors is pleased to deliver a fully franked interim dividend of 7.75 cents per share, currently representing an annualised fully franked dividend yield of 6.9%*.  Since inception in August 1999, WAM Capital has paid 238.5 cents per share in fully franked dividends to shareholders. 

The fully franked dividend has been achieved through the solid performance of the investment portfolio since inception and the profits reserve available and is consistent with the Company’s investment objective of delivering investors a stream of fully franked dividends. The Company’s profits reserve at the end of the period was 10.6 cents per share and forms part of the net tangible assets (NTA).

The investment portfolio increased 8.9% during the period, outperforming the S&P/ASX All Ordinaries Accumulation Index by 5.3% with an average cash level of 20.1%.

We were pleased with the investment portfolio’s solid outperformance, which was achieved by the investment team’s rigorous application of our proven investment process.

WAM Capital provided shareholders with a total shareholder return of 15.2% in the six months to 31 December 2019, reflecting the Company’s solid investment portfolio performance and the increase in the share price premium to NTA.

We look forward to providing an update to our WAM Capital shareholders during our Investor Conference Call on Thursday 12 March 2020 at 4.00pm-5.00pm (Sydney time) and meeting you at our next Shareholder Presentations in May 2020.

*Based on the 7 February 2020 share price of $2.25 per share.  


Click on link above for more.

Disclosure:  I hold WAM shares, as well as WLE & WGB shares.  I often also hold WMI, WAA and WAX shares although not currently.  I also hold BAF shares, with BAF soon to become the 7th LIC managed by WAMG.  BAF will be rebranded as "WAM Alternative Assets Fund".  Not sure of the new ticker code, as WAA and WAF are both already taken.

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#Company Presentations
Last edited 6 months ago

Wilson Asset Management Group (WAMG) do a roadshow around Australia's major capital cities every 6 months during which they spend a day in each of those cities doing a roadshow presentation on their six LICs and talking about their views on the local and global economies, the macro-environment, and their own portfolios (including some winners and losers amongst their own investments).

Their latest roadshow visited Adelaide last week (on the Wednesday 15th May 2019) and I attended.  The slideshow of their presentation can be viewed here.

Their April Investment Update can be viewed here.

Here are some of my notes from last Wednesday:

  1. I spoke with Matt Haupt before the presentation started and we discussed a number of things including my favourite company, Monadelphous (MND).  Matt said that while he didn't hold it in WLE (as he currently prefers holding miners to mining services companies) he did rate them highly and he did meet with MND management a couple of weeks ago in Perth and said that even they were surprised to have been awarded the second contract at BHP's South Flank (as they had expected BHP to split those up between different companies), but they were still hopeful of winning at least one major contract from Rio (for Koodaideri).  They were not as confident about the FMG contract however (Eliwana).  Monadelphous have a very good relationship with Rio.  FMG tend to do their own thing and are far less predictable.  Matt also said that MND were not too hopeful of being awarded any large new Woodside contracts - as they believe Woodside are leaning towards someone else for those currently.  I asked Oscar Oberg later (between the WAM & FG Presso's) about his views on MND and he said MND was in WAM & WAX as a research driven stock and he was bullish on them.  He said he still expected some decent contract announcements to come from Mono's.  [my note:  probably one or two from RIO and possibly someone else.]   I said that I was selling down recently at around $19, and he said "So was I!".  He added that he thought around $17 was a good level to be topping up again.  He expects them to have a good couple of years from here.
  2. A lot of discussion both during and outside of the official presentations concerned Labor's proposed changes to the refundability of franking credits, and Geoff's crusade against those.  It was Geoff who first coined the phrase, "Retirement Tax", which many seemed to have run with.  Labor have since lost the election, and Bill Shorten has quit as Labor leader, after a big swing against them in Queensland where concerns about jobs appeared to trump concerns about the environment and climate change, and a big element of older Australians, low-income earners with shares, self-funded retirees and SMSF owners taking up shadow treasurer Chris Bowen on his invitation for them to "Vote for the other side if you don't like our policies".  They did!  It would appear that Labor tried to introduce too much change too quickly, and were not as effective at getting their positive message across as the various groups opposed to their policies (including Geoff Wilson) were at getting theirs across.
  3. I heard Matt Haupt mention twice about Trump's 3-man "Plunge Protection Team" (one of whom is Trump himself) that comes out and calms the market whenever it falls significantly.  For instance, he'll go all hardline on China, saying they're trying to renegotiate everything and he's had enough and all tariffs are going up and there's going to be tariffs on everything, then the market falls, so he says it's more of a minor disagreement over details and talks are still productive.  Trump's quite happy to backflip on pretty much everything.  He doesn't mean what he says.  He sometimes doesn't even understand what he's saying.  Everything is a game.  A negotiation.  Tactics.  Positioning.  Misdirection.  (Lies?)  Jawboning.  
  4. Matt's bullish on gold and holds SBM, NST, NCM, SAR & EVN in WLE.  It's a nice set.  I'd probably include RRL and exclude NCM, but that's probably just tinkering around the edges.  He also holds IGO and WSA (Western Areas) in WLE and has a theory that Wesfarmers (WES) are possibly going to try to buy IGO & WSA and put them together to tie up the high-end battery-class nickel end of the market because Wesfarmers want to be a battery metals supply company now (to the world), hence their interest in Kidman Resources (lithium) and Lynas (rare earth oxides or REOs).  Marcus Padley also talked up IGO in his "Marcus Today" newsletter last Wednesday, suggesting they were a buy.  
  5. Matt also holds CSL in WLE, but is underweight the banks, and he hates Bendigo bank and he gave his reasons for that.  Back to CSL - Matt believes there is a good chance they will upgrade their guidance this month (in May) based on flu vaccine returns.  He believes they will have less returns, meaning higher sales, meaning improved guidance.  That's a catalyst they have identified and are hoping to see occur.

Continued in Straw #2

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#Business Model/Strategy
Last edited 6 months ago

Wilson Asset Management Group (WAMG) currently manage 6 LICs (listed investment companies) and those are:

  1. WAM, WAM Capital ($1.4 billion market cap)
  2. WLE, WAM Leaders ($866 million)
  3. WGB, WAM Global ($432m)
  4. WAX, WAM Research ($242m)
  5. WMI, WAM Microcap ($171m)
  6. WAA, WAM Active ($45m)

They have two broadly defined investment strategies.  The first is what they call "Research Driven" (RD) and the second is what they call "Market Driven" (MD) or "Active".

The RD (Research Driven) strategy uses their own filters and research to find companies that they can buy at good prices where they have identified one or more catalysts which should result in the market positively re-rating the company at some point in the future.  Their diligent and deep research focuses on free cash flow, return on equity and the quality of each company. Companies are rated with respect to management, earnings growth potential, valuation and industry position, but are only bought when an underlying catalyst has been identified that should result in a share price increase.

One of WAMG's competitive advantages is their extensive network of industry and other contacts plus between four and five thousand company meetings every year where one or more members of their team sit down and have face to face meetings with senior management of the companies they hold or are researching.  All of the positions in WAX are RD positions.

The MD ("Market Driven" or "Active") strategy looks to take advantage of short-term mispricing opportunities in the Australian equity market. Opportunities are derived from initial public offerings, placements, block trades, rights issues, corporate transactions (such as takeovers, mergers, schemes of arrangements, corporate spin-offs and restructures), arbitrage opportunities such as listed investment company discounts, short-selling and trading market themes and trends.  All of the positions in WAA are MD positions.

WMI (WAM Microcap) focusses on small companies (below the ASX300) and they use both strategies (RD & MD).  WAM (WAM Capital) also uses both strategies and holds companies that are held in WAX and WAA, and also some of those held in WMI and WLE.  WLE (WAM Leaders) hold larger companies that are predominantly in the ASX100, and most of their holdings would be in the ASX50.  WLE also uses both strategies (RD & MD).  WGB (WAM Global) also uses both strategies and focusses on companies that are listed on exchanges outside of Australia.

WAM Capital (WAM) is their largest LIC, their flagship fund, and gives investors access to both strategies, and to the larger holdings in WAA (MD only) & WAX (RD only), and to some of the holdings in WLE and WMI.

WAM, WAA, WAX and WMI are all managed by Martin Hickson and Oscar Oberg.  Those two are the PMs (portfolio managers) responsible for those 4 LICs.  WLE has its own team, headed up by Matthew Haupt.  WGB also has its own team, headed up by Catriona Burns.

Marty and Oscar stuffed up in December/January by going to around 50% cash near the bottom in December, and missing the swift bounce-back in January when it became clear that the US Federal Reserve ("the Fed") were changing direction and were now no longer planning to raise interest rates as previously indicated.  WAX was 53.3% cash at December 31st, WAA was 48.6% cash, WAM was 43.9% cash, and WMI was 39.3% cash.  By contrast WGB closed December with 29.9% cash and WLE was only 9.8% cash and never got above 15% cash at any point in December or January.

China had also stimulated their economy again and were producing numbers that suggested that the stimulis was having a positive effect.  The market rallied sharply in January and Marty and Oscar were too slow getting their money back into the market for WAM, WAX, WAA & WMI, so missed out on those early gains and this has hurt their performance.  

Over the past year, we have seen the SPs (share prices) of both WAM & WAX reduce from premiums to NTA (net tangible assets) of over 20% to single digit premiums.  WAM closed on Friday (17-May-2019) at $1.975 being around 6.5% to 7% above their pre-tax and post-tax NTA as at April 30th (their most recently published NTA).

I would argue that their underperformance vs their own benchmarks has meant that the reduction in SP premiums-to-NTA is entirely justified.  Their true value is of course their NTA, and we only ever get that with a time lag.  Their share prices have fallen a LOT because of the double whammy of their NTA reducing (due to underperformance) as well as their premium-to-NTA also reducing.

Their previous CIO (chief investment officer), Chris Stott, has retired, and Geoff Wilson has taken over the CIO role again for now, but Geoff appears to have been preoccupied with other matters over the past 6 months, like ensuring that the Australian Labor Party's proposed changes to franking credit refunds never got implemented - and various takeover attempts - of other companies or LIC's - or the management of other LICs (such as BAF).

Disc:  I hold WAM.

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#Company Presentations
Added 6 months ago

19-Nov-2019:  November 2019 Shareholder Presentation

Note: This Presentation is related to the WAM Group (WAM Funds) + FG (Future Generation) Funds November 2019 Australian Roadshow (which I'll be attending here in Adelaide next Wednesday) and covers all of WAM Group's 6 LICs:  WAM Global (WGB), WAM Leaders (WLE), WAM Capital (WAM), WAM Research (WAX), WAM Microcap (WMI) and WAM Active (WAA).

This one is for the Sydney leg of the roadshow, which includes their AGMs, but similar Presentations will be made at all of the venues they attend during the roadshow over the next couple of weeks.

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#Company Presentations
Last edited 7 months ago

Notes from WAM Group (WAMG or WAM Funds) Roadshow in Adelaide on Wednesday 15th May 2019:

Straw #3  (of 3):


Disclosure:  Of those companies mentioned, I hold WAM, WAX, WAA, WGB, WLE, FGX, MND, IGO, WSA, SBM, NST, EVN, CSL, CDA, ICQ and MGG (MGG is managed by MFG).



  1. See Straw #1
  2. See Straw #1
  3. See Straw #1
  4. See Straw #1
  5. See Straw #1
  6. See Straw #2
  7. See Straw #2
  8. See Straw #2
  9. See Straw #2
  10. See Straw #2
  11. See Straw #2
  12. See Straw #2
  13. See Straw #2
  14. During the FG (Future Generation) Funds Roadshow that followed the WAM Roadshow, Geoff, Mathew Kidman (representing Centennial Funds Management), and Victoria Somebody from Magellan (didn't catch the surname) were asked to give some stock picks.  MK tipped ICQ - iCar Asia - although he warned that they're high risk as they are only up to breakeven now, so not profitable yet.  His second pick was Think Childcare (TNK).  He said they were smaller than G8 (GEM) but better, and that the oversupply in childcare was done, and occupancy rates were rising again, and that a potential federal Labor government could be a net positive for the childcare industry.  Again, not so relevant now.  Victoria tipped Starbucks - as these ladies from Magellan always seemed to do.  GW tipped Vista Group (VGL) - and FGX (which he was buying personally that day).
  15. I spoke to Catriona Burns, the PM of WAM Global - WGB - during lunch - about Scout24 ("the REA and CAR of Europe", listed in Germany).  She said they didn't hold them, having sold a few weeks ago into the takeover offer from Private Equity, which has fallen over in the past couple of days.  As PE have now walked away (I understand the scheme was voted down - did not receive the required majority), the Scout24 SP has fallen back again, and I asked Catriona if she was considering buying back in, and she said, Definitely!  She likes the company a lot.  She just thought that there were risks around the takeover proceeding, especially as it involved PE (private equity) and they often make these bids before they have all of the necessary funding completely sorted out, so she sold out into the euphoria around the bid, and it paid off for her, as the bid did fall over and the share price is back down again now.  I explained that I don't follow Scout24 closely but I was impressed with her description of the company last year, and I do hold shares in WGB so was interested if she still held it (answer: no, but possibly yes again soon-ish).
  16. No GVF Presso this time around.  Miles and Emma are only coming out (from London) once a year nowadays, instead of every 6 months.  Also, no Chris Stott of course.  Geoff, Matt, Marty, Oscar, Catriona, Louise (from FGX/FGG), and Kate (WAMG's CEO) were all mingling and taking questions before and after the presentations, and during lunch.  The sandwiches were excellent.  The orange juice wasn't bad either.  The parking fee was pretty steep however - $18 for 4 and a bit hours.  Might have to catch the bus in next time, after my knee operation.

    That's all folks.
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#Company Presentations
Last edited 7 months ago

Notes from WAM Group (WAMG or WAM Funds) Roadshow in Adelaide on Wednesday 15th May 2019:

Straw #2 (of 3):


Disclosure:  Of those companies mentioned, I hold WAM, WAX, WAA, WGB, WLE, FGX, MND, IGO, WSA, SBM, NST, EVN, CSL, CDA, ICQ and MGG (MGG is managed by MFG).


  1. See Straw #1
  2. See Straw #1
  3. See Straw #1
  4. See Straw #1
  5. See Straw #1
  6. Each of the portfolio managers was asked to name a mistake they have made over the past 6 months and what they learned from it.  The most interesting one was Martin Hickson's answer, which was Magellan (MFG).  They bought MFG in October-November, sold out in December when they were going to ~50% cash, and their mistake was not buying MFG back in January, because they've risen 55% this year - from $28.54 on December 31 to close at $44.39 on Wednesday (15-May-2019).  Marty said the lesson was that you should always be prepared to look at something again that you've previously sold out of in case they are worth buying again.  Good companies can go through bad periods (or look like they are about to go through a bad period) and still remain good companies.  Sometimes one of the best buy ideas could be something you recently sold.
  7. Asked for a stock pick each, the PM's answers were:
    1. Oscar Oberg: APE (post the acquisition of AHG)
    2. Catriona Burns: Entertainment 1 (Pepper Pig may do well in China in this, the year of the pig, and content is becoming more highly valued)
    3. Martin Hickson: 5G Networks (5GN)
    4. Mathew Haupt:  WSA (Western Areas, again, the WSA/IGO amalgamation theory involving WES) but also because WSA have some very low cost and high grade nickel mines and should do well if Trump does the China-US trade deal.  Ditto for IGO by the way.
    5. Oscar Oberg (again):  CDA (Codan, a nice little Adelaide success story, selling telecommunications equipment and MineLab metal detectors to all parts of the globe).  Roger Montgomery was also a fan of Codan last time I checked.  Oscar thinks they should do 20% earnings growth annually over the next couple of years.
    6. Geoff Wilson:  WGB & WLE.
  8. When asked to rank the banks, Matt said that NAB was the standout because the have the been increasing provisions (for debts that may become bad but haven't yet) which can increase profits in later years if those provisions are not required (ANZ have been doing the opposite, so may get caught out badly if they get too many bad debts), and NAB have the greatest exposure to business, especially small to medium businesses.  They also have the most opportunity for cost cutting to improve profitability.  He rates CBA as the second best, and Westpac a fair way behind.  ANZ is the worst and he said that at best ANZ could trade sideways but in a low credit growth environment, there were no obvious catalysts that might cause a positive re-rating of ANZ, so there's little reason to hold them.
  9. He mentioned that CBA may well announce a special dividend or off-market buyback this month because they have a $5 BILLION franking credit balance, and it would make sense to try to get that out to shareholders before June 30.  They also have more than adequate capital in terms of cash they need to hold, so they will be able to distribute quite a bit without worrying about their capital adequacy requirements.  That may not be as relevant now that Labor have lost the Federal election.
  10. When asked how often Matt meets with senior executives from the big four banks, he replied that he would see somebody from one of the banks at least once per fortnight.  Altogether, the team estimate that they now have between 4,000 and 5,000 meetings with company management teams every year.  If I recall correctly, Geoff mentioned that WAM are now the 4th largest LIC in Australia, although he could have meant LIC fund manager, but either way their size gives them relevance and opens more doors, especially now that they have a large cap fund and a global fund.
  11. Profit reserves, from biggest to smallest, in cents per share:
    1. WAX: 28c
    2. WMI: 19c
    3. WLE: 8.4c
    4. WAM: 7.6c
    5. WGB: 5.6c
    6. WAA: 4.5c
  12. Those are what the dividends are sourced from, so the higher the profit reserve (per share), the more sustainable the dividend yield is.  
  13. When asked if they were still holding stocks based on the expected boom in infrastructure construction Marty said that they were, but some of the names had changed.  They hold CIM, DOW & SVW now.
  14. See Straw #3
  15. See Straw #3
  16. See Straw #3 
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