Why did the WAM Capital share price outperform its sector today?

It seems investors are supporting WAM Capital over other LICs.

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Key points

  • WAM Capital shares outperformed some of its LIC peers today
  • Investors are still in line to get the final dividend from the FY22 result
  • The LIC also outperformed the share market index in August

The WAM Capital Limited (ASX: WAM) share price outperformed others in its sector on Wednesday. It's one of the ASX's biggest listed investment companies (LICs).

While WAM Capital shares were down 0.54%, other LICs saw significant sell-downs amid market declines due to US inflation data.

For example, the Argo Investments Limited (ASX: ARG) share price declined 0.87% while the Carlton Investments Limited (ASX: CIN) share price dropped 1.64%.

It was a much rougher day for the funds management sector. The Perpetual Limited (ASX: PPT) share price fell 3.7% and the Magellan Financial Group Ltd (ASX: MFG) share price declined 5.52%.

What could have supported the WAM Capital share price?

What happens to share prices on the ASX is up to investors. So, it's investors that are ensuring that WAM Capital shares didn't get dragged down as much as other ASX shares today.

One factor could be that the LIC announced its monthly update to the market today.

In it, WAM Capital said that its investment portfolio increased during the month of August 2022, outperforming the S&P/ASX All Ordinaries Accumulation Index (ASX: XAOA).

Investors may also be factoring in that the LIC reported that its portfolio had a 12.5% cash weighting at the end of last month, which may help cushion the blow against market declines.

Another factor could be that WAM Capital shares have not gone ex-dividend yet. Some shareholders may not want to sell because they know that if they do, they will lose their entitlement to the FY22 final dividend of 7.75 cents per share. At the current WAM Capital share price, its annualised dividend comes to a grossed-up dividend yield of 12%.

What else was announced?

WAM Capital also told investors about two of its investments that did well — NRW Holdings Limited (ASX: NWH) and oOh!Media Ltd (ASX: OML).

NRW is a provider of diversified contract services to the resources and infrastructure sectors. WAM pointed out that the business upgraded its earnings guidance in early August, then told the market about its strong outlook when it reported its FY22 result. Its order book was at "record levels".

The withdrawal of the merger proposal with Maca Ltd (ASX: MLD) was seen as "disciplined capital management" from NRW which strengthened the fund manager's confidence in the company and its management.

Meantime, oOh!Media is the largest outdoor advertising media company in Australia. Its result impressed, with a 62.1% rise in adjusted underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $51.5 million. It also reduced net debt.

The investment team at WAM said:

We remain positive on oOh!Media as the company recovers from the coronavirus pandemic and believe that earnings will perform better than market expectations. The company also announced an on-market share buyback of up to 10% of its issued share capital, highlighting the strength of the balance sheet.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended oOh!Media Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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