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    Wam Capital (WAM)

    What is your opinion of WAM? Currently it is trading at $1.60 which is 20 cents above it lowest price for the last 12 years. (In the past it has been up to $2.40.) It is paying a very steady dividend of 15.5 cents, plus 60% franking. That is a yield of 9.7% even without the franking credits. The P/E is 7.72. Most commentators believe interest rates will be reduced next year. If that is true, then most listed investment companies will do well. In the meantime a yield of 9.7% plus franking sounds very attractive. Would you buy it for one of the portfolios? Kind regards, John

    Answer

    Hi John,

    Firstly we do believe interest rates will decline over the coming 12-months, credit markets are pricing in four 0.25% cuts by the RBA in that time frame. WAM is down ~30% over the last 3-years and although it’s now paying a 15.5c part-franked yield dividends have failed to offset the capital depreciation; in a rising market.  Their performance has improved in FY24 after a few years of weaker results, which often happens when funds that operate in the smaller cap market get larger – WAM at $1.7bn is too big in our view.

    They have a relatively high expense ratio with a 20% performance fee, still trading at a premium to their pre-tax NTA (the value of their underlying portfolio).

    • WAM is not one for us.
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    WAM Capital Ltd (WAM)
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