Top fund manager produces 248.5% increase in profit

Credit: Flazingo Photos

Shares in listed investment company WAM Capital Limited (ASX: WAM) have leapt over 3% higher on Monday after the group reported a 248.5% surge in profit.

Here’s what investors need to know:

  • A record operating profit before tax of $103 million for the half-year ending December 31 has been announced. This represents a gain of 248.5% on the prior corresponding period (pcp)
  • The operating profit after tax came in at $74.6 million, compared with $23 million in the pcp
  • The investment portfolio rose by 25.6% over the 12 months to December 31, representing significant outperformance against its benchmark
  • Management highlighted a handful of top performing portfolio holdings which helped achieve this outperformance. They included Smartgroup Corporation Ltd (ASX: SIQ), a2 Milk Company Ltd (Australia) (ASX: A2M), Blackmores Limited (ASX: BKL), IPH Ltd (ASX: IPH) and SG Fleet Group Ltd (ASX: SGF)
  • Impressively, these results were achieved while holding an average cash balance of 31.5%
  • A fully franked interim dividend of 7.25 cents per share (cps) has been declared. The shares will trade ex-dividend on April 27, with payment scheduled for May 13

Foolish takeaway

WAM Capital’s investment portfolio has achieved a return of 18.3% per annum (pa) since inception in 1999. This return represents outperformance against its benchmark of 10.3% pa and interestingly it has been achieved while holding an average cash weighting of 34% over the life of the company.

Given WAM Capital’s solid track record of outperformance and the higher than average current cash balance which is approaching 45%, investors looking for an easy way to gain exposure to the market during this period of heightened volatility may find WAM Capital and its high levels of available cash particularly appealing.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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