The fund manager Wilson Asset Management (WAM) has recently identified some ASX blue-chip shares that it owns (or owned) in one of its leading portfolios.
WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).
There's also one called WAM Leaders Ltd (ASX: WLE) that looks at the larger businesses on the ASX, which investors can call ASX blue-chip shares.
WAM says WAM Leaders actively invests in the highest quality Australian companies.
Does WAM have a good reputation for picking stocks? The WAM Leaders portfolio has delivered gross returns (before fees, expenses, and taxes) of 16.1% per annum since its inception in May 2016, compared to the S&P/ASX 200 Accumulation Index average return of 9.8%.
These are the blue-chip ASX shares that WAM outlines in its recent monthly update.
Qantas Airways Limited (ASX: QAN)
Qantas is Australia's largest airline. WAM noted that last month the company released a "strong" FY22 third-quarter update, with domestic travel rebounding to pre-COVID-19 levels ahead of expectations and "strong" demand for international travel as more markets and travel routes reopen.
The fund manager said it has confidence in Qantas' earnings growth profile and the profitability targets for the medium term.
WAM also noted the Qantas plan for 'Project Sunrise' – it has an idea for the longest flight in the world in late 2025. It will fly direct from Sydney and Melbourne to London and New York.
Qantas has announced a major aircraft order which will be fulfilled over the coming decade by utilising debt and free cash flow.
The ASX blue-chip share has also launched a bid to buy Alliance Aviation Services Ltd (ASX: AQZ)
Brambles Limited (ASX: BXB)
Brambles boasts that it helps move more goods to more people in more places than any other organisation on Earth. It provides pallets, crates, and containers. Brambles says it helps form the invisible backbone of the global supply chain. It owns approximately 355 million pallets, crates, and containers.
WAM pointed to the FY22 third-quarter update where Brambles upgraded its FY22 earnings guidance for the second time in two months.
Brambles is seeing price increases, reflecting "more appropriate" cost-to-serve dynamics and inflation surcharges. Pallet availability remains "tight" across all key markets.
Prior to the takeover talks, WAM said the key Brambles share price driver would be the decision to move ahead, or not, with its plastic pallets project with Costco, as well as further clarity around the return profile that this investment may offer.
The fund manager likes Brambles because of its "underestimated defensive qualities, strong pricing power, and return potential as a non-consensus market view".
Since WAM revealed its view on Brambles, the ASX share has been in preliminary talks about a takeover with CVC Capital Partners. But then Brambles told the market CVC wouldn't be putting forward a proposal nor seeking to do due diligence because of the current external market volatility.
