WAM - WAM Capital

[qldfrog]

you'll get an answer, whether it's a good answer or an obfuscation remains to be seen.

I've several questions.
1. Does he feel embarrassed being called the "king of closed end funds" as in this article?

From Ackman to AFIC, fund manager discounts persist

Bill Ackman’s failed attempt to float the largest ever closed-end fund shows that a high profile and even a solid track record isn’t always enough to win.

www.afr.com

(whereas it's patently obvious there are bigger more established LICs. Maybe not as adept at self-promotion, though)
2. Does he feel that his workload is too great? I ask this because at the GVF 2023 AGM, as a Director, he looked distracted, bored, unengaged, and left as soon as possible. This is not saying that his earlier efforts with Miles Staude are unappreciated but maybe it's time to pass the baton?
3. As someone frequently quoted to look to "buy a dollar of assets for 90c, if not 80c", how does he feel about the persistent discounts of a few underscale LICs such as WAR and WMA?
4. Does he remember saying in response to a question, that he'd wind up WMA if it was still under NTA after 5 years? This was at a presentation pre-Covid and hence close to 5 years ago. I realise the old BLA shell was only under Wilson control from Oct 2020..

Dona,
I think anyone knowing you would find plenty of excuses not to have a one on one interview with you, you are a walking PR bomb for any opponent

 

[Chipp]

you'll get an answer, whether it's a good answer or an obfuscation remains to be seen.

I've several questions.
1. Does he feel embarrassed being called the "king of closed end funds" as in this article?

From Ackman to AFIC, fund manager discounts persist

Bill Ackman’s failed attempt to float the largest ever closed-end fund shows that a high profile and even a solid track record isn’t always enough to win.

www.afr.com

(whereas it's patently obvious there are bigger more established LICs. Maybe not as adept at self-promotion, though)
2. Does he feel that his workload is too great? I ask this because at the GVF 2023 AGM, as a Director, he looked distracted, bored, unengaged, and left as soon as possible. This is not saying that his earlier efforts with Miles Staude are unappreciated but maybe it's time to pass the baton?
3. As someone frequently quoted to look to "buy a dollar of assets for 90c, if not 80c", how does he feel about the persistent discounts of a few underscale LICs such as WAR and WMA?
4. Does he remember saying in response to a question, that he'd wind up WMA if it was still under NTA after 5 years? This was at a presentation pre-Covid and hence close to 5 years ago. I realise the old BLA shell was only under Wilson control from Oct 2020..

Maybe you need to go and ask these at an AGM . It's an informal lunch , i am not going to put the man through the wringer . I wouldnt ask these questions without researching the basis of them and i am not doing that . Geoff is accessible , ask him yourself .

Months ago i hit him up as the WAM website was down one weekend and i was trying to do some research . I had no idea but he was in London and from London he organized the correction , He said he was open to a DM if i had questions . Seems a decent chap to me

 

[divs4ever]

Still don’t understand why he gets bashed so much. Is it because he’s making money? Nothing wrong with that,
At the end of the day, business is just that. Friends? In business?? Nah.

I hold WAM and WLE because I choose to. I don’t see the problem with fees, at the end of the day, I get a decent dividend from them.

I don‘t hold any other LIC. (Yes I do, OPH.) In my limited knowledge of them, I haven’t come across one that’s performed any better, even fees aside.

well in my case i was very happy in those LICs now taken-over , they worked in a niche that suited me nicely , and would have been replaced that operate in an area already covered ( by me directly or another satisfactorily performing fund/LIC )

since i was being offered a LIC i had already resisted buying , i sold my affected holdings on market before the deal completed

WAX did what i wanted done , WAM and WLE didn't do anything i needed done

i tend to vote with my cash

 

[Gretsch]

As they old saying goes,
“Money Talks.”

 

[Bellcose]

Just gimme the money.

Maybe by using some of the $536m in accumulated losses the LIC could do that? Oddly none of the LICs I hold have any.

 

[divs4ever]

Maybe by using some of the $536m in accumulated losses the LIC could do that? Oddly none of the LICs I hold have any.

View attachment 182385

well they do move some shares around they are bound to have some , but that is for the accounting department to deal with

 

[Bellcose]

Post #146 displays a high degree of Duh. Why pay tax on profitable sales if shareholders have losses which are available and can offset that tax?

Anyways, not my problem. Never held WAM and never will.

 

[Gretsch]

Dear Fellow Shareholder,​ The WAM Capital Limited (ASX: WAM) investment portfolio increased 26.4%* in the financial year, outperforming the S&P/ASX Small Ordinaries Accumulation Index by 17.1% and the S&P/ASX All Ordinaries Accumulation Index by 13.9%. WAM Capital's strong investment portfolio performance added 20.8 cents per share to the profits reserve during the year. The profits reserve was 1.6 cents per share at the start of the year after the FY2023 final dividend, and ended the year at 14.7 cents per share, increasing to 18.8 cents per share at 31 July 2024. The investment portfolio performance contributed to a 37.0% increase in the operating profit before tax of $319.4 million (FY2023: $233.2 million) and an operating profit after tax of $229.2 million (FY2023: $173.3 million) in the Company’s 2024 full year results. The WAM Capital investment team has strongly outperformed the market, allowing the Board to maintain the extremely high full year dividend of 15.5 cents per share for shareholders.

Dividends since inception​ The WAM Capital Board of Directors declared a final dividend of 7.75 cents per share, partially franked at 60%, given the Company’s franking account balance at the end of the financial year. The full year dividend of 15.5 cents per share provides shareholders with a high dividend yield of 10.1%** and a grossed-up yield of 12.7%** when including the value of franking credits. The level of franking in FY2025 and beyond is dependent on tax paid on realised profits and the receipt of franked dividends from investee companies. The WAM Capital Board of Directors expects the FY2025 full year dividend to also be partially franked at 60%, should the Company be able to maintain the full year dividend of 15.5 cents per share.

The Company has maintained an extremely high franked dividend yield over the past five years. WAM Capital is one of the highest yielding listed investment companies (LICs) in Australia and in order to continue paying a 15.5 cents per share full year dividend, the investment portfolio needs to increase more than 16% per annum, grossed-up for fees and taxes. There is no certainty that such high returns can be maintained each year. Since inception, WAM Capital has returned over $1.8 billion or $4.39 per share in dividends and franking credits to shareholders. The return on any equity investment for shareholders can be made up of a combination of capital (i.e. movement in the Company’s share price) and income (i.e. through franked or unfranked dividends paid to shareholders on a semi-annual basis). If the dividends paid to shareholders (including franking credits) exceeds the increase in assets during the year, then the NTA of the Company declines. One of the benefits of the LIC structure is that the profits reserve accumulated over time allows the Company to maintain its dividend during volatile periods in equity markets. Following the coronavirus pandemic and market volatility in 2020, the Board made the decision to maintain the 15.5 cents per share franked dividend for shareholders rather than reducing the dividend, recognising the importance of regular income through franked dividends to shareholders. Over the past five years, WAM Capital has paid shareholders an average grossed-up dividend yield on the pre-tax NTA of approximately 14%, which is much higher than the return on the equity market and the investment portfolio performance over this time. Over the same period, the S&P/ASX Small Ordinaries Accumulation Index rose 3.7% per annum and the S&P/ASX All Ordinaries Accumulation Index was up 7.6% per annum, while the WAM Capital investment portfolio increased 10.1%* per annum. WAM Capital’s high franked dividend yield, in excess of the annualised return of the investment portfolio performance, has resulted in a capital reduction of approximately 5.2% per annum of the Company’s NTA as the value of the franked dividend of 15.5 cents per share and the tax paid to frank the dividend have been paid out each year. The Company has paid out 109.4 cents per share to shareholders during this five-year period, including 77.5 cents per share in franked dividends and 31.9 cents per share in franking credits, providing shareholders with a significant income stream that resulted in a reduction in capital. The dividends and franking credits (tax paid) paid out to shareholders exceed the reduction in the Company’s share price and NTA over this period, as shareholders have received a high-income component to their returns, versus a combination of income and capital growth. Total shareholder return (TSR) (i.e. the movement in the Company’s share price together with franked dividends paid to shareholders) for WAM Capital has been impacted over the past five years with the Company’s share price premium to NTA reducing from a high of 32.4% in late 2020 to a discount of 4.6% as at 30 June 2024. TSR for WAM Capital shareholders over the past five years was 4.8% per annum, including the value of franking credits. LICs can trade at premiums and discounts to their underlying NTA and over the past 10 years, WAM Capital has traded at an average premium to NTA of 16.4%. A LIC’s premium or discount to NTA can move independently of the underlying investment portfolio performance of the Company. Please refer to the Chairman’s letter in the 2024 WAM Capital Annual Report for further details.

 

[Value Hunter]

Post #146 displays a high degree of Duh. Why pay tax on profitable sales if shareholders have losses which are available and can offset that tax?

Anyways, not my problem. Never held WAM and never will.

I am not an expert on tax but am guessing it may have something to do with the fact that WAM is classified as a "trader for tax purposes" which means the taxation works completely differently to a normal situation.

 

[Chipp]

Its a trade not an investment and i will more than likely beat the average annual Super return inside 8 weeks , ive traded it at least 10 times previously . Its that reliable i wrote an algo to trade it and its has a win rate north of 90% in a 20 trade period . Buy and Hold only is for those without an ounce of Alpha in their blood . Dont take it personally , i realise the markets are a hobby for most . I am fully invested in the markets not a handful of stocks .

There it is , 10% in 8 weeks and change . The only one not surprised is me

 

[Bellcose]

I am not an expert on tax but am guessing it may have something to do with the fact that WAM is classified as a "trader for tax purposes" which means the taxation works completely differently to a normal situation.

I think one major difference is WAM, being classified as a trader, doesn't allow it to stream LIC Capital Gain Discounts.

It's interesting in what it does. The profit for the year is recorded in accumulated losses which is then transferred to the profit reserve out of which dividends are paid. I suppose if the LIC did reduce accumulated losses, it could result in dividends eventually drying up or be reduced severely as the profit reserve was emptied.

 

[Value Hunter]

WAM Capital’s high franked dividend yield, in excess of the annualised return of the investment portfolio performance, has resulted in a capital reduction of approximately 5.2% per annum of the Company’s NTA as the value of the franked dividend of 15.5 cents per share and the tax paid to frank the dividend have been paid out each year.

So WAM has acknowledged its dividend is unsustainable in the long-term.