Wilson Asset Management (WAM) is famous amongst the listed investment company (LIC) circle for being one of the largest and most loved listed asset managers on the ASX. Started by Geoff Wilson in 1997, WAM now boasts six LICs in its stable and its Funds Under Management continues to grow at record rates. Therefore, it makes sense that when WAM releases its monthly investment updates, most of us Fools pause what we’re doing to have a read.
WAM Capital Limited (ASX: WAM)
WAM Capital is the ‘original’ WAM LIC, having been around since 1999. Since that time, WAM Capital has delivered a solid performance of 16.7% per annum and currently pays an 11% grossed-up dividend yield. According to WAM’s June update, WAM Capital’s investment portfolio increased by 0.7% in June and is sitting on a net tangible asset (NTA) value of $1.84 per share (a 20% premium to its current share price of $2.21).
WAM Capital made a significant move to cash this month, with its cash and fixed interest percentage rising from 19.7% in May to 25.3% in June, which may reflect the LIC’s concerns at record high share prices.
Some of WAM Capital’s top performers for June include Codan Limited (ASX: CDA) and Ausdrill Limited (ASX: ASL).
WAM Research Limited (ASX: WAX)
WAX is another Wilson LIC that also focuses on small- to mid-cap ASX companies, using a slightly different investing strategy to WAM Capital. WAX also boasts a solid history of outperformance behind it, with a 16.2% return per annum since 2010. WAX is currently paying a grossed-up dividend yield of 10.42%. The WAX investment portfolio decreased 0.5% in June and is sitting on an NTA per share of $1.18 (a 17% premium to its current share price of $1.38).
WAX also increased its cash reserves in June to 25.4%, up from May’s levels of 21.9%. Unlike WAM Capital, WAX doesn’t engage in short positions in ASX shares.
Although both WAM and WAX have a good history of outperformance, both LICs have trailed the index in recent years, yet still command a healthy price premium. I personally would wait for this discount to significantly narrow before opening a position, but as income stocks, both WAM and WAX remain attractive.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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.