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Valuation of $1.370
Added 3 years ago
Scroll down for latest update. April 30th 2019 Pre-Tax NTA: $1.2039 (ex-div). April 30th 2019 Post-Tax NTA: $1.1769 (ex-div). 6 months on: October 31st Pre-Tax NTA: $1.2522 (ex-div). October 31st Post-Tax NTA: $1.2264 (ex-div). October 31st NTA after tax but before tax on unrealised gains: $1.2471 (ex-div). NTA increase of just over 4% in 6 months, so around 8% pa (annualised). SP has been rising steadily since June. I hold WLE shares. November 30, 2019: Pre-tax NTA for WLE was $1.3016, and the share price has remained 3 to 4 cents below that level for the past couple of weeks (to December 27th 2019). I spoke to Matt Haupt and Oscar Oberg during the November roadshow when they visited Adelaide and Oscar (who manages WAM, WAA, WAX & WMI, but not WLE or WGB, which are managed by Matt and Catriona) told me that he has been buying WLE and WGB shares himself ahead of his own LICs because they were both trading at discounts to their NTA and his LICs were trading either at premiums or at NTA - or close enough to NTA as to clearly NOT be bargains. He told me that just like Geoff Wilson himself, he (Oscar) likes to buy $1 worth of assets for less than $1, and you can still do that with WLE and WGB. I hold both of them of course. 22-June-2020: Update: WLE pre-tax NTA was $1.15 on May 30, 2020. Share price was $1.08 then, and is now a little lower at $1.065. WLE had 15.6 cps in their profit reserve - enough for 2.5 years of dividends. Cash = 8.9%. After WAM Global (WGB), WAM Leaders (WLE) has the next best discount to NTA of the 6 LICs currently managed by Wilson Asset Management (aka WAM Funds). Their flagship fund, WAM Capital (WAM) is trading at an NTA-premium of over 20% and WAM Research (WAX) has a NTA-premium in their SP that is between 35% and 40%, which is huge! I'm not going to pay those sort of premiums, particularly for WAM Capital (WAM) which has less than one half-year dividend in their profit reserve. WAX has a much better profit reserve but a they're also at a much higher premium-to-NTA. The best value is currently WGB, then WLE, then WMI. I now hold all three (I sold my WAM today, and bought some WMI and more WGB - I already had a decent position in WLE). BAF is also very interesting, and will be even more interesting when it becomes WAM Alternatives instead of Blue Sky Alternatives Access Fund - and their ticker code gets changed - probably to WAL (because WAA and WAF are both taken already). I also hold BAF shares. Update: 21-Dec-2020: WLE's pre-tax NTA as at 30-Nov-2020 was $1.2896, so $1.29 is my new valuation for them. I do NOT currently hold WLE shares, having taken profits after the gap between the NTA and the SP closed up. In other words, I bought them at a substantial discount to NTA, then sold them at close to NTA, when the NTA was actually significantly higher as well. WLE's top 20 holdings (in alphabetical order) at 30-Nov-2020 were: ANZ, BHP, CBA, CSL, FMG, IAG, NAB, OZL, QAN, QBE, RHC, RIO, S32, SCG, SGR, STO, TCL, TLS, WBC, WOW. 18-Mar-2021: Update: 28-Feb-2021 before tax NTA = $1.37. After tax NTA = $1.31. Share price at the end of Feb was $1.43, and is now $1.52 (on 18-Mar-2021), so WLE has moved from a small discount to NTA to now being priced with a small premium to NTA in the share price. Nothing like the rediculous premium that WAX is trading at (+38.7% premium to NTA at end of Feb) or the more modest premiums of WAM (+14%) or WMI (+16.8%), but still at a small premium. Even WAM Global (WGB) was trading at a small premium (of +4.8%) to NTA at the end of Feb, and I can't think of any other globally focussed LIC (an ASX-listed investment company that invests in companies outside of Australia) that is currently trading at an NTA premium, so that's quite a feat! In fact, the only LIC that WAM Funds manage that was NOT trading at a premium to NTA at the end of Feb 2021 was WAM Alternative Assets (WMA), which had a before tax NTA of $1.10 and closed the month at $0.995, being a 9.5% discount to NTA, which is a lot less than the big discount they were trading at prior to WAM Funds taking over the management, and that was fairly recent, so in time they may also end up trading at an NTA premium as well. However, they also might not, because of the very nature of the assets they hold, and the market's perception of the margin of error that may need to be factored in to their valuations of those assets. A lot of WMA's assets aren't trading daily on an exchange like company shares are, so the valuations are a little harder to work out, and for that reason it is quite possible that a 10% discount - or thereabouts - might be as good as it gets. We shall see. But back to WLE - WAM Leaders - Matt and John (and their team) are doing a great job with this fund, and the share price reflects the underlying portfolio performance. It's all good. Wish I was still holding them actually...
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#Profit Reserves/Div Guidance
Last edited 4 years ago

14-Jan-2021:  In the cover letter accompanying their December 2020 Investment Update or "LIC Snapshot" as they now call it, Geoff Wilson (from WAM Funds) said today:

Dear Fellow Shareholder, 

We are pleased to announce the December 2020 Investment Update for our listed investment companies.

Markets rallied in the final month of a very turbulent year. The Trump Presidency is coming to a disgraceful end with the storming of the United States Capitol building and a second impeachment of the outgoing President, while a new strain of the coronavirus and rising case numbers in the US and Europe weigh on healthcare systems. The vaccine roll-out and the US stimulus package approval supported equity markets in December.

The S&P 500 Index rose by 3.7%, the NASDAQ Composite Index 5.7%, the UK FTSE 100 Index 3.1%, the Euro Stoxx 600 Index 2.5%, Japan’s TOPIX Index 2.8% and China’s CSI 300 Index 5.1% in local terms, while the MSCI World Index (AUD) declined 0.5% for the month. In Australia, a coronavirus outbreak in Sydney and localised lockdowns during the month caused concern among investors ahead of the summer holiday period. The Australian dollar rose 9.7% against the US dollar in 2020, underpinned by rising commodity prices, with iron ore reaching a nine-year high in December. The S&P/ASX All Ordinaries Accumulation Index rose 1.8% for the month. 

Our listed investment companies' 2020 performance

We are pleased to deliver strong absolute and relative investment portfolio performance during the challenging social, economic and financial landscape that we witnessed this year. Our six equity-focused listed investment companies’ (LIC) investment portfolios outperformed* their respective benchmarks in the 2020 calendar year and the 2021 financial year to date.

Supported by strong risk-adjusted outperformance and profits reserves available, WAM Leaders Limited (ASX: WLE) and WAM Global Limited (ASX: WGB) announced FY2021 fully franked interim dividend guidance of 3.5 cents per share and 5.0 cents per share respectively. 

Based on their 13 January 2021 share prices, these represent annualised grossed-up fully franked dividend yields of 7.5%# for WAM Leaders and 6.0%# for WAM Global.

WAM Leaders has 24.3 cents per share in profits reserve**, representing 3.5 years of dividend coverage for shareholders.   WAM Global has 43.0 cents per share in profits reserve**, representing 4.3 years of dividend coverage for shareholders. We look forward to sharing the interim results for all seven of our LICs in the coming weeks. 


* Investment portfolio performance and index returns are before expenses, fees and taxes.

# Grossed-up dividend yield includes the benefit of franking credits and is based on a tax rate of 30.0%.

** The profits reserve is before the fully franked interim dividend guidance.


--- end of excerpt ---  You can access their full December 2020 report here.


[I currently hold WGB and WMI, and I have held WAM, WMA (previously BAF), WAA, WAX and WLE previously, and may do so again in the future.]

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#Shareholder Presentations
Added 5 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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#Business Model/Strategy
Last edited 5 years ago

WLE (WAM Leaders) is one of six LICs (Listed Investment Companies) managed by Wilson Asset Management Group (WAMG).  WLE focusses on larger companies, predominantly in the ASX100, and most of their positions are in the ASX50.  

They are currently (as at Friday 17th May 2019) trading at a 10% discount to their April 30th pre-tax NTA - which was $1.23.  WLE closed on Friday at $1.105.  It would be reasonable to expect a little bit of a rise today (Monday 20th May 2019) considering Labor has just lost the unlosable Federal Election, partly on the back of their policy of changing the refundability of franking credits for a large number of Australians.  With the Libs now set to retain government, that issue has been put to bed for at least another 3 years (and quite probably longer), and WAMG's founder and CIO, Geoff Wilson, who is also the Chairman of WLE, was a very vocal opponent of Labor's failed policy on franking credit changes.  He was the first to coin the phrase "Retirement Tax" which was picked up by most of the opponents to the policy and most of the independents and minor party senators who in most cases also pledged to vote against the changes should Labor win the election and try to introduce legislation to bring into effect their poorly thought out and badly structured policy (a little editorial licence here thank you, those views expressed here are not necessarily those of owners or staff or even necessarily the views of the majority of Strawman users, although I suspect that most people who hold dividend paying shares would prefer the status quo).  Anyway, bank shares might have a little bounce today, as might Telstra and other stocks viewed as "yield" or "income" stocks.  WLE, ARG, AFI, MLT and some of the larger LICs who hold bank shares and other large cap income stocks might also do reasonably well on the back of Labor's defeat.  WLE look good here as long as you can buy them below their last reported NTA, and, as I said, they closed Friday at around 10% below their last reported NTA (net tangible asset backing).

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