WAM Global Ltd (ASX: WGB) is one of Wilson Asset Management’s newest Listed Investment Companies (or LICs), IPO-ing on the ASX in June last year. WAM Global seeks to apply the Wilson Asset Management’s formula of investing in undervalued companies with a ‘catalyst’ that the firm has successfully made itself a fortune within Australia and apply it to companies all over the world.
After an initially successful IPO, WAM Global has stumbled somewhat and is now trading well below its float price of $2.20 (which it hasn’t approached since October). Although it hasn’t seen raging success yet, I am still very confident in the future of WAM Global. Wilson Asset Management (WAM) is famous for its outperforming funds. The company’s flagship LIC – WAM Capital (ASX: WAM) has returned 16.8% per annum since its inception in 1999, outperforming the index by 8.4%.
WAM Global also provides a diverse exposure to international shares. As of April, its top holdings are Alphabet Inc. (Google) and American Express Company, with US stocks making up almost 56% of holdings. It also has exposure to the French, German, Japanese and UK markets and is currently holding about 11.5% cash.
Why I think WAM Global is currently a buy
There are two main reasons why WAM Global shares are looking very attractive in my opinion. Firstly, the Net Tangible Assets (NTA) of the LIC are currently much higher than the price of the shares – at $2.28 to $1.96 respectively. This NTA discount means at current prices (at the time of writing), you can buy $2.28 worth of assets for $1.97 – an instant return of almost 14%! Being able to buy LICs at a discount to their NTA is one of the unique benefits of investing in these vehicles over individual shares, and right now, the market is offering up a significant discount.
Secondly, WAM boss Geoff Wilson has clearly noticed this discount, as he has been buying heavily into WAM Global. Mr Wilson already owns a sizable chunk of the company (he bought $5 million worth of shares in the IPO) and has purchased additional shares no less than 8 times in May so far. To see Mr Wilson so enthusiastically put his money where his mouth is (particularly at these prices) gives me great confidence in the future of WAM Global.
I already own shares in WAM Global and will certainly be interested in picking up more if this discount continues or widens. International diversification is an important part of successful investing, and I think WAM Global is a great place to start.
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Motley Fool contributor Sebastian Bowen owns shares of 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.