Wilson Asset Management delivers record profits

Wilson Asset Management, the investment team behind listed investment company (LIC) WAM Capital (ASX: WAM) has delivered record profits of $44.2 million helped along by a significant boost to the company’s asset base.

The merger during the financial year 2013 with Premium Investors added $64.9 million to the assets of the company. Coupled with a placement and option issue and a 22.7% increase in the investment portfolio — which delivered outperformance of 2% above the benchmark — overall assets grew to $486.5 million.

Three companies held by WAM Capital during the year and which management highlighted as important contributors to the portfolio’s performance were G8 Education (ASX: GEM), REA Group (ASX: REA) and Amcom Telecommunications (ASX: AMM).

Start-up child care provider G8 Education had a stellar year as it continued to grow its network of centres across Australia. Over FY 2013 the share price soared around 150% as the company expanded and profits grew.

The online real estate portal company REA Group continued to take market share from its newspaper competitors as well as expanding its offering to customers. REA’s shares marched 100% higher over FY 2013.

Up-and-coming telecommunications firm Amcom provides a range of services to customers including data services, internet services, cloud solutions and operation of a fibre-optic network. The share price increased over 80% during the financial year taking the market capitalisation towards $500 million.

Foolish takeaway

WAM Capital currently holds around 48% of its portfolio in cash. While holding so much cash can be a drag on performance in a rising market, the investment team has still managed to outperform the market. This bodes well for shareholders as they have benefitted from a rising market but maintained the option of holding cash, which is essential for allowing management to act quickly and decisively when opportunities arise.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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