WAM Microcap Limited (ASX: WMI) just reported its result to 31 December 2017.
WAM Microcap is one of the listed investment companies (LICs) run by Wilson Asset Management, it focuses on the smallest end of the market.
This is the LIC's first report, so there aren't many comparative figures. The below figures are for the period between 8 March 2017 and 31 December 2017
It recorded net realised and unrealised gains on its shares of $38.9 million and $2.2 million of other revenue, which was mostly dividends received.
Management fees came in at $935,274 and it paid $308,784 in brokerage. Performance fees were $2.47 million due to its outperformance.
Net profit after tax (NPAT) for the period was $26,475,000. Earnings per share (EPS) calculated from 23 June 2017 (the allotment date) was 18.91 cents.
WAM Microcap's portfolio increased by 27.2% since inception whilst only being invested 79.1% on average, this outperformed the S&P/ASX Small Ordinaries Accumulation Index by 8.6%. This performance is before expenses such as management fees.
The pre-tax net tangible assets (NTA) per share increased by 24.4% for the period ended 31 December 2017.
The total shareholder return for WAM Microcap for the period to 31 December 2017 was 32.7%, this was mostly from the portfolio performance of 27.2% but also the rise in the share price's premium to the NTA value.
WAM Microcap's board has declared a dividend of two cents per share, which will be paid on 27 April 2017.
WAM Microcap Chairman, Geoff Wilson, said "As we have deployed $154 million of shareholders' capital, our focus has continued to remain on our investment objectives – providing a stream of fully franked dividends to shareholders while preserving their capital and preserving their capital and providing capital growth".
Foolish takeaway
This was a very impressive first report by WAM Microcap, with an excellent portfolio return. I wouldn't expect the next six months to be anywhere near as good, but I do believe the WAM Microcap investment team will continue to soundly outperform its benchmark and the main Australian indexes.
If we assume another two cent dividend in six months the current grossed-up dividend yield is 3.78%, but I imagine management will bring the yield up to the level of the other WAM LIC yields in the region of 8% or more once WAM Microcap has more profit reserves.
It's currently trading at a 16.8% premium to the January 2018 post-tax NTA, it isn't cheap. This is a smaller premium compared to WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX). I would still say WAM Research is my favourite WAM LIC, followed by WAM Microcap and then WAM Capital.
