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Why WAM Capital Limited likes Scottish Pacific Group Ltd

WAM Capital Limited (ASX: WAM) is one of the biggest listed investment companies (LICs) in Australia. It has an excellent record of outperforming the market, it has returned an average of 15.4% per annum over the past five years.

Anything that WAM Capital chooses to invest in is worthy of consideration for our own portfolios.

A few days ago WAM Capital and the other WAM entities took a major shareholding position in Scottish Pacific Group Ltd (ASX: SCO).

Scottish Pacific Group describes itself as Australia and New Zealand’s largest specialist provider of working capital solutions with a comprehensive range of debtor finance and trade finance facilities.

One of the things that stands Scottish Pacific Group apart from its competitors is how high its clients rate it. In the most recent survey conducted, its clients gave it a net promoter score of +82, which the company says is rare in the financial services industries.

Over the past year the share price has grown by 14.9%, which outperformed the market by a decent margin.

In its recent half-year result for the six months to 31 December 2017 it revealed a pleasing set of numbers. Net revenue increased by 8.8%, net profit after tax (NPAT) increased by 11.5%, the cost to income ratio decreased to 49.9%, operating cash flow increased by 67% and the dividend increased by 12.5%.

Foolish takeaway

The big four banks are stepping away from some areas and smaller providers are able to step into that space. Scottish Pacific isn’t the type of investment move I’d make in my portfolio, but it could be an interesting opportunity for some people. At least, WAM seem to think it’s at a good price right now.

I’d rather stick to what I know about, which is why I think these top stocks are worth looking at.

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Motley Fool contributor Tristan Harrison owns shares of WAM Capital Limited. 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 Scott Phillips.

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