Is WAM going ham on Magellan High Conviction Trust (ASX:MHH)?

Brokers suspect WAM has been buying up this one…

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A smiling man wearing a hard hat holds a note that say WAR, indicating share price movement

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Brokers believe Wilson Asset Management (WAM) has been adding Magellan High Conviction Trust (ASX: MHH) to its latest listed investment company while it readies its initial public offering (IPO).

In yet another listed investment company, commonly referred to as a LIC, WAM is bringing WAR to the ASX boards. Don’t worry, not literally war… WAM Strategic Value will be the latest LIC to hit the ASX, trading with the ticker ‘WAR’.

Looking for an ASX bargain in Magellan’s MHH?

WAM’s Strategic Value LIC is the asset management company’s latest investment opportunity. The focus of WAR will be on identifying, investing in and closing discounted asset opportunities. In Wilson’s words, “Essentially, we are focused on identifying and investing in $1 of assets for 80 cents.”

To find such investments, the company will be looking at securities that are trading at discounts to assets or net tangible assets (NTA), corporate transactions, and dividend yield arbitrages with franking credit benefits.

According to brokers, Magellan High Conviction Trust might be making an appearance as one of the company’s holdings. The exchange-traded trust fits the discounted criteria.

On Friday last week, the trust held a net asset value of $1.658. However, the Magellan High Conviction trust closed the day at $1.455 – representing a 12.2% discount.

The trust managed by Hamish Douglass holds investments in some of the world’s largest companies, including Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), Facebook Inc (NASDAQ: FB), and Microsoft Corporation (NASDAQ: MSFT).

Despite holding some US tech stock titans, the ASX-listed MHH trust has returned a meagre 4.86% in the past 12 months.

Where to next for WAM’s WAR?

WAR is wrapping its offer up this afternoon at 5 pm. According to the prospectus, if all goes to plan the investment company will list on the ASX on Friday 25 June 2021.

Furthermore, the offer was capped at $225 million with 13.2 million shares on offer. Therefore, when the company lists, the benchmark price would be $1.25.

Once listed, investors will likely find out whether or not Magellan High Conviction Trust was added.

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