The fund manager, Wilson Asset Management, is always on the lookout for ASX shares that it thinks are exciting investment ideas.
The listed investment company (LIC), WAM Research Ltd (ASX: WAX), targets businesses that it sees as the most compelling, undervalued growth opportunities in the Australian market.
The investment strategy appears to have worked effectively, as the WAM Research portfolio has delivered an average annual return of 15.2% since July 2010, before fees, other expenses, and taxes. This has significantly outperformed the S&P/ASX All Ordinaries Accumulation Index (ASX: XAOA)'s return of 9.4% per annum.
While the two businesses that WAM has highlighted aren't two of the most well-known businesses on the ASX, they appear to have compelling futures. They are both businesses within the top 20 holdings of the WAM Research portfolio.
Let's take a look at them.
Image source: Getty Images
Autosports Group Ltd (ASX: ASG)
The fund manager described Autosports Group as a motor vehicle dealership operator and provider of automotive services, with a major focus on the luxury and prestige car segment.
WAM pointed out that the Autosports share price benefited in October from strategic merger and acquisition activity.
During last month, the business completed the acquisition of Mercedes-Benz Canberra and after that secured a prime Southport, Queensland site to develop a new flagship Mercedes-Benz facility.
The fund manager believes these two acquisitions signalled to the market that the ASX share is delivering on its strategic options of deepening collaboration with luxury brand manufacturers such as Mercedes-Benz and its growing capital city presence.
The investment team believe Autosports Group is set to benefit from continued efforts to expand its dealer footprint and an improving macroeconomic backdrop.
Regis Healthcare Ltd (ASX: REG)
The other ASX share that WAM highlighted was one of Australia's largest residential aged care providers. The fund manager said that the business operates a national network of facilities with a growing pipeline of developments.
In October, the Regis Healthcare share price benefited from acquisitions. On 23 October, it agreed to acquire two high-quality residential agreed care facilities on Victoria's Surf Coast and Bellarine Peninsula for approximately $45 million, funded from existing net cash. The gross price per bed is "well below" replacement value.
The acquisitions increase Regis Healthcare's capacity by 230 beds, supporting occupancy and profit margin outcomes, as well as strengthening the company's footprint in Victoria.
WAM concluded on the ASX share:
We believe Regis Healthcare is a discerning capital allocator with respects to its acquisition activity and that the company is poised to benefit from funding tailwinds and increasing demand for aged care service.
