WAM Microcap Limited

Strong Investment Portfolio Return: WAM Microcap Limited (ASX: WMI) is in the business of making deployments towards the public equity markets of Australia. While making investments the company takes into consideration the stocks of those companies which are in the operations towards diversified sectors. It is regarded as the equity mutual fund (closed-ended) which is being overlooked by MAM Pty Limited. With ASIC or Australian Securities and Investment Commission, the company got registered on March 8, 2017. It started operating on June 20, 2017 after the initial public offer or IPO which got oversubscribed and the company managed to raise $154 million. From March 8, 2017 to June 30, 2017, the company generated profit after tax amounting to $30.6 million.


Top 20 holdings of WAM Capital investment portfolio (Source:  Company Reports)

On average, the company managed to deploy 80.4% in the equities and it has witnessed the rise of 31.2% in the investment portfolio from inception till June 30, 2018. Moving forward the company believes that an optimal capital would be kept with regards to the investment strategy as well as they would be aiming micro-cap companies. In the company’s investment update presentation for August 2018 the portfolio which covers small to mid -cap companies witnessed the rise of 2.7% outperforming the S&P/ ASX All Ordinaries Accumulation Index. In the month, the company’s mentioned portfolio was mainly helped by the Seven West Media (ASX: SWM), Specialty Fashion Group (ASX: SFH), Jumbo Interactive (ASX: JIN), Accent Group (ASX: AX1) as well as Mayne Pharma Group (ASX: MYX).

What Could help WAM Microcap Limited Moving Forward: The management of WAM Microcap is having a favorable outlook for FY 2019. The company is making an entry having conservative balance sheet, no debt, moderate cash as well as along with flexible approach towards the investments. No matter how the market conditions would turn into moving forward, the company would remain committed towards the investment opportunities. Moreover, it would also be gaining the advantages from the investment opportunities when they arrive.

Technical Overview:
On the daily chart of WAM Microcap Limited, MACD (Moving Average Convergence Divergence) indicator has been applied by using the default values. As per the observation, MACD line has crossed the signal line and is moving upwards. This represents the bullish momentum which is expected to continue moving forward. Moreover, exponential moving average (EMA) has also been applied on the chart using default values. The stock price has crossed the EMA and is expected to further move in the upward direction.

At the time of writing, the stock traded at A$1.500; and given the prospects, we maintain the “Speculative Buy” rating on the stock while it trades at a discount to net tangible asset (NTA).
 

Naos Emerging Opportunities Company Limited

Good Dividend Player: NAOS Emerging Opportunities Company Limited (ASX: NCC) is being traded on Australian Securities Exchange or ASX under the symbol NCC. The company is in the business of capital protection of the investors. The company also provides the long-term capital appreciation to the investors along with the fully franked dividends. The company ended FY 2018 by generating the profit after tax amounting to $4.1 million. The company’s investment portfolio managed to garner the return of +7.1% in FY 2018. However, this return represents the underperformance from the benchmark index.

Historical Dividend Trend (Source: Company Reports)

The company’s NTA (net tangible assets) growth was also not significant in the financial year. This was because a rise in the net tangible assets, which the company managed because of favorable investment portfolio’s performance, got offset by dividends which the company paid to the shareholders as well as because of tax payments.

How FY 2019 Would Shape Up For NCC: The top management of NAOS Emerging Opportunities Company is having a favorable outlook on the performance for FY 2019. The company’s investments are expected to witness a rise in the earnings which they have generated in FY 2018. According to the company, BSA Limited (ASX: BSA) as well as Consolidated Operations Group (ASX: COG) were the companies which impacted the performance of NCC. However, over the next twelve months, these companies are expected to deliver strong shareholder returns. Both the companies now have the strong financial positions and moving forward they could witness robust momentum in their earnings.

Technical Overview of NCC: MACD (Moving Average Convergence Divergence) indicator has been applied on the daily chart of NAOS Emerging Opportunities and the default values have been incorporated. As per the observation, the MACD line has just crossed the signal line and is moving in the downward direction. Meanwhile, the company is optimistic about the outlook for BSA and COG which might help in improving the performance of the NAOS emerging opportunities.
Since, the MACD has just crossed the signal and the expectations are that it might further go in the downward direction, we maintain “Speculative Buy” rating on the stock at the current market price of A$1.295 per share while the stock trades at a slight discount to NTA.


NTA as at September 30, 2018 (Source: Company Reports)
 

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