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Geoff Wilson just sold some WAM Research Limited (ASX:WAX) shares

Leading investor Geoff Wilson has sold some of his WAM Research Limited (ASX: WAX) shares according to an ASX released announced to the market today.

WAM Research has been one of the best-performing listed investment companies (LICs) over the past five years and indeed since the GFC.

Over the past seven years its portfolio has returned 19.3% per annum before fees and expenses. It has also increased its dividend every year since the GFC and it currently offers a grossed-up dividend yield of 8%.

It has been a very strong performer and that has created a lot of interest with investors focused on a large growing dividend. WAM Research is trading at a 28% premium to its August 2018 pre-tax NTA of $1.32.

As investors we should be trying to buy shares at a discount, perhaps selling when something becomes materially overpriced.

I think all the WAM LICs are worthy of trading at a small premium to NTA due to the investment team’s ability to outperform over the medium-term and long-term.

However, the current WAM Research premium is huge and I can understand why Geoff Wilson decided to sell 68,637 shares yesterday for $116,763.47. But, it must be said this was only a small part of his trust’s remaining 4.77 million shares.

Geoff Wilson puts his money where his mouth is – he has regularly bought shares of WAM Leaders Ltd (ASX: WLE) and WAM Global Limited (ASX: WGB) because he thought they were good value. His move of selling WAM Research shares is also a good indicator of what he likely thinks of its valuation.

Geoff Wilson has re-invested the WAM Research sale money into WAM Global shares.

Foolish takeaway

I won’t be selling my WAM Research shares, but I can understand if people want to take some profits off the table or be a little active in buying and selling WAM Research shares throughout the year as it grows in premium before the dividend is paid and then falls back again.

A better valued dividend idea is this top share which just grew its dividend by 20% in FY18.

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Motley Fool contributor Tristan Harrison owns shares of WAM Research Limited and WAMGLOBAL FPO. 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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