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Valuation of $1.205
Added 2 years ago
September 30th 2019 pre-tax NTA (net tangible asset backing) was $1.2388, so basically $1.239, or $1.24. Post-tax NTA was $1.2229 (call it $1.22). It would cost you just under $1.24/share to replicate their September 30th portfolio at September 30th closing prices. August 31st, 2020: Update: WAX's pre-tax NTA as at 31-July-2020 was 99 cps (cents per share), and their SP (share price) was $1.345, being a +35.86% PREMIUM to their NTA. One of the biggest drawcards of WAX is their generous dividend yield, and the fact that they have such a large profit reserve (to fund their dividends). Thei profit reserve on July 31st was 27.7 cps, being enough for almost 3 years worth of dividends at their current rate (of 9.8 cps/year). This is in stark contrast to WAM Capital (WAM), which will have almost nothing in their profit reserve after they pay out the recently declared 7.8 cps dividend (payable on November 27). At July 31, WAM Capital's profit reserve (PR) was just 8.7 cps. WAM Active's (WAA's) PR is pretty run down as well - being only 7.1 cps on July 31. Other than WAX (with a 27.7 cps PR), the other three Wilson LICs with the healthiest PR's are WAM Microcap (WMI) with 33.9 cps, WAM Global (WGB) with 30.1 cps and WAM Leaders (WLE) with 16.2 cps. Little wonder that the three I currently hold are WMI, WGB and WLE, the ones who are best positioned to fund their dividends into the future but are not trading at double digit premiums to their respective NTAs. It's only that premium that is currently keeping me out of WAX. Other than that, I think Oscar Oberg and Tobias Yao are doing an outstanding job with WAX. But WAX is just too expensive at this point in time. The other thing of course about profit reserves is that they represent profits, from both dividends and distributions received as well as capital gains from sales of shares at a profit. Clearly those Wilson LICs with the healthiest profit reserves are the LICs that are making the most profits. That's another good reason to hold them rather than those who aren't making profits. In the case of WAA (WAM Active), they are 100% market-driven ("Active") rather than "Research-driven", and that particular strategy does not generally perform particularly well in strongly rising markets, as a lot of their income is supposed to be derived from low-percentage arbitrage opportunities and from Geoff Wilson buying stakes in other underperforming LICs with a view to either reducing their NTA discounts or taking over the management of that LIC at some point. WAX (WAM Research) is the exact opposite, being 100%-research-driven, hence it is more profitable and also has a rediculously high NTA premium in the price. WAM Capital (WAM), their original flagship fund, is 50/50 Active/Research, so it holds everything that WAA and WAX hold, except in larger quantities, simply because WAM Capital is a MUCH bigger fund (at $1.45 Billion) than WAX (at $286m) and WAA (very sub-scale at only $50m). My own view is that the "active" or "market-driven" half of WAM Capital (WAM) is dragging down its performance. Hence the very low profit reserve which currently only has enough in it to fund the recently declared dividend, with about one cent per share left over. In my view WAM Capital does NOT deserve to be trading at a 20% to 30% premium to NTA. WAM Capital's NTA was $1.61 on July 31st, and they closed that day at $1.925 - which was a +19.57% premium to NTA. They closed today at $2.14, being a +32.92% premium to their last disclosed (July 31) NTA. Rediculous!! WAX closed today at $1.485, which is exactly 50% above their $0.99 NTA on July 31st. Of course, a lot can happen in a month, but if WAX's NTA rose 50% in August I'll eat my hat. 01-Mar-2021: No, their pre-tax NTA only rose +10% in August (2020) to $1.09, but now, 6 months later, has marked my WAX valuation as "stale" and so I'm once again updating it - to their last reported pre-tax NTA, which was $1.14 on 31-Jan-2021. On that day (or the last trading day prior to that day, because that day was a Sunday), WAX closed at $1.64, being a +43.86% premium to their $1.14 pre-tax NTA, and they closed today (01-Mar-2021) at $1.66, +45.61% higher than their January NTA. Even WAM Global (WGB) recently moved to a small NTA-premium, which according to my research is the ONLY globally focussed LIC on the ASX (an ASX-listed LIC that only invests in stocks outside of the ASX) that is NOT trading at an NTA-discount. Love him or hate him (nobody hates him, do they?), Geoff Wilson knows how to market his LICs, and he seems to get them all up to an NTA-premium eventually. That said, I continue to believe that premiums of over 40% above NTA are stoopid, rediculous, illogical, and goes against the natural order of things, but that opinion seems to have no bearing whatsover on the share price of WAX, which continues to bounce along at a 40% to 50% NTA-premium. I wouldn't pay $1.40 to $1.50 for a $1 worth of assets, yet the market seems happy to continue to do so. Basic supply and demand. Plenty of demand, limited supply it would seem. Happy holders who do not, as a rule, want to part company with their WAX shares. Fair enough. 30-Aug-2021: WAX's 31-July-2021 Before-Tax NTA was 120.07 cps ($1.207) and their share price was $1.655, so they were trading at a +37% premium to their NTA. Too rich for my money. Doesn't matter how well they perform, and they have performed well, I'm not going to pay $1.37 for each $1 worth of assets they own. Their NTA after tax but before tax on unrealised gains was 124.99c, so $1.25, and their NTA after tax (including tax on unrealised gains) was 120.67c ($1.2067), so all well below the 165.5c ($1.655) that they closed the month at. They closed today (30-Aug-2021) at $1.71, some +41.67% above their July 31 pre-tax NTA. Their top 20 positions, in alphabetical order (not in weighting order), as at 31-July-2021, were: ACL, ALG, CCX, CDA, EVT, IMD, IPH, LGL, LOV, MGH, MYR, NXT, PDL, SGF, SLK, SVW, UMG, VEA, VRT & WEB. They have just declared another 4.95 cps FF div, so they are paying 9.9c FF/year, or around a 5.8% div yield based on their current $1.71 SP. Sure that's a nice yield, but I know where I can get that elsewhere without paying $1.37 to $1.41 for every $1 worth of assets. The ridiculous premium to NAV in their SP is mainly because of the loyal shareholder base, who just do not want to sell, so any who are prepared to sell their WAX shares generally want a very high price for them. Most are happy to just hold and keep collecting those dividends. If I held them, I'd sell up here to lock in those substantial profits and buy something else that is a lot cheaper and still pays the same yield. But that's just me. Other people have different opinions clearly.
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Last edited 4 years ago


Good morning,

The WAM Research (ASX: WAX) Board of Directors announced today a 152.8% increase in operating profit before tax to $14.6 million and a 159.3% increase in operating profit after tax to $11.0 million in its FY2020 half year results. The Board also announced a fully franked interim dividend of 4.9 cents per share, currently representing an annualised fully franked dividend yield of 6.6%*.

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 30.1 cents per share and forms part of the net tangible assets.

*Based on the 14 February 2020 share price of $1.475 per share. 


That was from an email I received this morning - from their Chairman and founder, Geoff Wilson.

Disclosure:  I don't currently hold WAX shares, but I hold WAM, WGB & WLE shares, plus BAF shares (BAF will soon also become a WAMG-managed LIC, with the management transition currently being negotiated).  I do occasionally hold WAX, WAA & WMI shares, just not at this point in time.  

The positives for WAX are that they have the largest profit reserve (at 30.1 cps) of any of their LICs, and that ALL of their holdings are research-based, as opposed to WAA which are 100% market-driven (active/trading positions).  WAM (their flagship fund - WAM Capital) is a combination of both strategies.  The research-driven investments have generally performed better, hence the larger profit reserve that WAX has, from which dividends are paid.  That level of profit reserve means that the next 3 years worth of dividends are already there - which provides a level of comfort around the dividend yield (of around 6.6%, fully franked) regardless of future performance.  However, after a poor FY19, WAX is back!  With a 150%+ increase in operating profit (both before and after tax) in H1 of FY20.  Every one of WAMG's six LICs have had a very good first half it seems.

The negative for WAX is that they continue to trade at a significant premium to NTA so you're paying over the odds if you want to jump on the ride now.  Their pre-tax NTA at Jan 30 was 121.47 cps and they're trading at $1.51 today.  That's a 24.3% premium to their last published pre-tax NTA which is right at the top end of the range across the LIC spectrum these days.  Most LICs trade at discounts to NTA, partly due to underperformance, but also because we've had so many new LICs hit the boards over recent years and they are now less popular (likely because so many of them have had performance that was a lot worse than expected).  The biggest 3 LICs in Australia are AFI, ARG & MLT and they tend to trade pretty close to NTA (often at a slight discount or slight premium but not at 20%+ premiums or discounts like WAM & WAX).  My WAM shares were bought years ago at much lower prices and I would love to hold WAX shares again, but I'm not buying at an NTA-premium of over 20%, no matter how good their dividend yield and most recent performance has been.

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Last edited 4 years ago

That's a link to a 23rd May 2019 article published this week on (Livewire) in which Geoff talks about what has happened over the past 6 months to turn him from being ultra-bearish to now moderately bullish ("My prognosis was wrong"). 

Each of Geoff's lead PMs (portfolio managers) also talk about their own views and discuss some individual holdings that they have within their own portfolios and why they like them (and why they hold them).  Those PMs are Catriona Burns (responsible for WAM Global, WGB), Matt Haupt (WAM Leaders, WLE), Oscar Oberg (WAM, WAX & WMI) and Martin Hickson (WAM, WAA & WMI).  [Note: Oscar is the PM of WAX - WAM Research, Marty is the PM of WAA - WAM Active, and they jointly manage WAM & WMI - WAM Capital and WAM Microcap]. 

Geoff is the CIO (chief investment officer) with the overall responsibility for the performance of the 6 LICs that they manage, but Geoff's role is more hands-off nowadays, having set up the investing framework, philosophy and rules, he sits in on the weekly meetings and monitors their progress, but he mostly leaves the stockpicking to those 4 now.  He has other things that keep him busy, like media and takeovers.

Their previous CIO, Chris Stott, has recently retired, but is still a director on the board of a couple of those LICs.

This Livewire article is mostly distilled from the presentations given at the recent WAM Roadshow that has been happening over the past fortnight around Australia's largest cities, but it's presented in a nice, easy-to-follow way, and does contain a couple of additional bits that have been added in.


Disclosure:  I currently hold WAM, WAA, WAX, WLE and WGB.  I have also held WMI in the past, and may well do so again in the future.  I've become a little concerned with the performance of Oscar and Marty since Chris left, especially over the December-January period when they seriously underperformed, especially with WAM & WAX.  I'm happy enough with Catriona and the WGB portfolio, and I think Matt is doing a good job with WLE, which is my largest holding currently.  It's interesting that the two Wilson LICs that I'm most bullish about (WLE & WGB) are both trading at NTA-discounts, while the ones trading at NTA-premiums are the ones that have performed the worst (WAX & WAM) more recently - and the ones I hold the least amount of shares in currently.  I sold most of my WAM & WAX - and all of my WMI - earlier last year when they were still trading at NTA-premiums of over 20% in the case of both WAX & WAM and I can't remember what WMI's NTA-premium was, but it was significant.  Those premiums have all since reduced significantly.  Ideally, buy good quality LICs when their outlook is bright, they have tailwinds, and they are trading at NTA discounts.  I would argue that only two of Wilson's six LICs tick all those boxes currently.

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#Company Presentations
Added 4 years 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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#Bull Case
Last edited 4 years ago

May 2019:  WAX is the Wilson (WAMG) LIC with the highest profit reserve.  Geoff said last Wednesday (15th May 2019) that WAX had 28c per share in the profit reserve.  Their profit reserve is where their dividends are paid from, and the larger the profit reserve, the more sustainable the dividend is, and the more likely they are to increase that dividend over time, even if they are underperforming the market or their own benchmark - as they have done for the past 6 months.

WAX (WAM Research) is the only one of the six LICs that WAMG manage that contains 100% research driven companies (no active/market driven positions), and their SP has come down quite a bit over the past year due to both underperformance and also because their rediculous premium to NAV (which was over 20%) has now come back down to around 6% to 7% (based on Friday's close of $1.26, and their April 30 pre-tax NTA - of $1.17).

They are rising today (Monday 20th May) - as expected - since Labor have lost the federal election here in Australia - so their proposed changes to the refundability of franking credits is now off the table - but as long as you're happy to pay a single digit premium to NTA instead of a double digit premium (especially one that begins with a "2"), WAX look interesting here.

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