Wilson Asset Management (WAM) is one of the highest-performing fund managers. WAM has named a number of ASX shares that could be worth taking a look at.
WAM runs a number of different funds/listed investment companies (LICs) including WAM Capital Limited (ASX: WAM) and WAM Microcap Limited (ASX: WMI). The WAM Microcap portfolio has performed particularly strongly since the bottom of the COVID-19 crash.
Lead portfolio manager Oscar Oberg spoke to Livewire about the market and some of the ASX shares and themes that WAM is looking at:
COVID-19 recovery
One of the main areas where WAM is finding opportunities at the moment is looking at companies, sectors and countries that have been particularly hit hard by COVID-19 but may soon go through a recovery phase. He was referencing the UK and US in-particular.
Some of the ASX shares that he mentioned were: Pendal Group Ltd (ASX: PDL), Virgin Money UK CDI (ASX: VUK), Reliance Worldwide Corporation Ltd (ASX: RWC), Corporate Travel Management Ltd (ASX: CTD) and Flight Centre Travel Group Ltd (ASX: FLT).
One of the main ones he talked about was the UK bank Virgin Money which is/was trading at a 30% discount to its book value and could be well placed to rebound. The ASX banking recovery could prove to be a template with what might happen with Virgin Money over time.
Changing business models
WAM is also looking for ASX shares that are emerging from this COVID-19 period with a stronger competitive position or a better offering. Virtus Health Ltd (ASX: VRT) was one example that he talked about, suggesting that the IVF business may license its technology to IVF providers around the world.
Doing it this way wouldn't take up much capital and wouldn't be expensive, and could bring in some good earnings for the company over time.
Environmental, Social, and Corporate Governance (ESG)
ESG is becoming a bigger factor for investors as time goes on. One ASX share he mentioned was Pact Group Holdings Ltd (ASX: PGH).
Mr Oberg thinks that Pact is going through a recovery phase and the strategy of increasing exposure to recycling plants makes sense.
Left-field pick
One interest pick that the WAM portfolio manager talked about was Link Administration Holdings Ltd (ASX: LNK). WAM believes it actually has a lot of growth potential because of its 44% holding of PEXA, which is an online electronic conveyancing ASX share – it has a market share of 75% in Australia.
Mr Oberg thinks that PEXA could be a global growth story and the UK could be one of the first places that it attempts an expansion.
Small cap
WAM Microcap's entire purpose is to find small cap ASX shares and Enero Group Ltd (ASX: EGG) is one that he mentioned that has really turned itself around over the last decade. A sizeable amount of its earnings comes from US tech companies. WAM really likes the OB Media business for its growth potential, balance sheet, potential to make acquisitions and cheap valuation.
He revealed that Enero is the biggest position in the WAM Microcap portfolio.
Aged care
Aged care is another sector that makes up quite a sizeable position in the WAM portfolios. Estia Health Ltd (ASX: EHE) is one of the larger ASX share positions in WAM Microcap and WAM Capital.
WAM thinks the sector has bottomed and will benefit from the ramifications of the royal commission if the upcoming federal budget is favourable for the sector. Regis Healthcare Ltd (ASX: REG) is another pick within the sector. The aged care players also benefit from higher property prices.
