11-Sep-2024: WAM Leaders pre-announced their results and dividends last month - see here: WAM Leaders increases fully franked full year dividend [26-Aug-2024]

Here's their 2024 Annual Report.

Here's the reason they are my largest position currently in my largest real-money portfolio:

That and one other fact: That they have enough in their profit reserve to keep increasing those dividends for another 3 years at least (PR = 31 cps).

Today they released this: WAM Leaders FY2024 Full Year Results Q&A Recording.PDF

WLE closed today unchanged at $1.29, after trading up to $1.315 during the day. Their end-of-August NTA was $1.37/share (as shown above). So they're still available at a discount to their underlying net asset value (NAV, a.k.a. NTA - Net Tangible Assets). Not a huge discount but a discount nonetheless.

Website: https://wilsonassetmanagement.com.au/listed-investment-companies/wam-leaders/

Disclosure: WAM Leaders is currently my largest position; I hold 100,000 WLE shares. They are in my "income portfolio", the largest one I manage.

People often think that a LIC like this only does well when the market does well, but sometimes it can be a little counterintuitive, because when the market is doing well, everybody considers themselves an investing expert and wants to invest directly in companies themselves, and when things get rocky, people either go to cash or they stick their money into ETFs or LICs which means they are outsourcing that portfolio management for that portion of their investable capital.

Sometimes reliable dividend paying LICs can move to a premium in more turbulent market conditions when self-funded retirees and other people that need to maintain an income stream (like me at the moment) want to lock in that income stream.

26-Aug-2024: WAM Leaders increases fully franked full year dividend (.PDF file)

This one is currently my largest real money position (100,000 shares). As I expected, WLE declared a 4.6 cps dividend, in line with their large profit reserve and the fact that they've increased their dividends every single year since inception, and I expected them to do it again, and they did.

I hold WLE for two reasons. The first is income, with that dividend yield of over 7%, which is over 10% grossed up (so including the value of the franking credits; all their divs are fully franked). The second is large cap exposure.

I tend to not follow large caps too closely as there are already too many professional fund managers and analysts and brokers and journo's and all the rest following our largest companies, so what insight am I going to have over them? To make money I need to be right when others are wrong, so buying at a good price when the person(s) selling to me are thinking that they are making a good move by selling at that price.

Sometimes both are right, as in it makes sense for me to buy at that price, for me, and it makes sense for them to sell at that price, for them and their circumstances.

However most of the time, in simple terms, someone is getting the better end of that deal. And when it comes to large caps, I don't feel I have an edge with most of those companies, so I don't bother. I either steer clear of most of them or I outsource that to an ETF (or two) or to a large-cap LIC that is paying better-than-market dividends and has a history of outperforming the index.

WLE have some shorter term underperformance but their portfolio (before expenses, fees, taxes, etc.) has outperformed the index over 3 year, 5 years, 7 years, and since inception (which was May 2016). Those outperformance numbers are +2.2%, +5.2%, +4.3% and +3.6% respectively, so not massive outperformance, but a bit here and a bit there and it all adds up. Even after fees.

The main advantage is they had 29.5 cps in their profit reserve @ June 30, so they can pay this 4.6 cps divy (declared today, as I expected), another 9.3 cps next year (interim & final divs combined), then 9.4 cps the following year, then 9.5 cps the following year (that's for FY27) - and still have money left in that profit reserve - and that's if they do NOT make ANY profits between now and then, and of course they will make further profits, but it's a very healthy profit reserve when they have another 3 years' worth of divs already covered, even with modest increases to those divs every year, after they pay the one they declared today.

I only hold two LICs - WLE and WGB (WAM Leaders and WAM Global) who both have dedicated investment teams with lead portfolio managers who are not responsible for any other LICs - just the one LIC for each of them - and in Matt Haupt's case also the WAM Leaders open-ended fund as well, which has exactly the same strategy - so holds the same companies. I was able to buy both at discounts to their NTA, they both pay great dividends, they both have very healthy profit reserves that guarantee future dividends even if they seriously underperform during the next couple of years, and they both provide me with exposure to companies I'm not comfortable to invest in directly myself in a lot of cases because I consider them to mostly be outside of my sphere of competence (wheelhouse).

The downside risks are (1) that we get a global downturn or a sharemarket crash for any reason, and/or (2) one or both of those LICs underperform and drag the share price lower as their NTA falls. However, I want sharemarket exposure and one of those risks is going to be present whichever way I choose to get that exposure, even via ETFs, and the other risk is one I'm willing to take based on the two LICs' lead portfolio managers' track records and investment styles.

Catriona Burns and her team at WGB had already pre-declared their FY24 final dividend, to be paid in November, and it's going to be 6 cps, fully franked, which puts them on a 5.4% fully franked yield (or over 7.5% grossed up) based on their closing share price today of $2.22, which is just above what I paid for my WGB. That's a good yield for a global shares LIC listed on the ASX - and the franking credits are all from tax paid on trading profits as they obviously don't get any franking credits from their investee companies - as none of them are listed here in Australia or pay Australian tax. So it's rare to get good dividends from an ASX-listed Global LIC, but to have them fully franked as well is particularly unusual - but good! I no complain!

But back to WLE - who reported today. It won't always be my largest real-money investment, but it is today. LYL is second. GNG is third. WGB is fourth. RMS is fifth (across two portfolios, and they reported today and they increased their dividend by +150% and that was just one of many highlights). There are a few other gold companies coming up behind those ones in terms of postion sizes.

It might seem like I am overly focused on dividends here, but what I'm really trying to achieve is TSRs and TSRs include both dividends and capital gains/losses, and the dividends are often a lot easier to predict than the capital gains, especially with LICs that have good profit reserves. So, yeah, I'm back in two LICs for now. But my strategy can quickly change when new opportunities present themselves.

https://wilsonassetmanagement.com.au/listed-investment-companies/wam-leaders/

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.]

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.

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 Strawman.com 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).