Stocks’ Details
 

WAM Capital Limited

 
Portfolio Update of WAM in December 2019: WAM Capital Limited (ASX: WAM) is one of Australia’s top Listed Investment Companies, managed by Wilson Asset Management which offers investors exposure to an actively managed diversified portfolio of undervalued growth companies.  On 3 February 2020, the company announced that Wilson Asset Management Group, a substantial holder of TGG, has increased its voting power from 10.18% to 11.19%.
 
WAM Capital investment portfolio gave a negative return of 3.3% in December 2019 as compared to S&P/ASX All Ordinaries Accumulation Index, which decreased by 1.9% in December 2019. S&P/ASX Small Ordinaries Accumulation Index for the period gave a negative return of 0.3%. The following table provides an idea of the company’s performance:
 

Performance of WAM’s Portfolio (Source: Company Reports)
 
What to Expect: For the first half of 2020, the company is positive for the equity market as it expects that global central banks will continue to support the economies.However, the company remains cautious about the direction of the Australian equity market, as the record low-interest rates have driven up valuations and heightened speculation.
 
Stock Recommendation: The stock of WAM is trading at $2.250 with a market capitalisation of ~$1.63 billion. The stock is trending at the upper band of its 52-week trading range of $1.920 to $2.340. The stock has generated stellar returns of 8.13% in the last six months. The stock has an annual dividend yield of 6.86% and a P/E multiple of 108.65x. The stock has a price to book value of 1.2x on TTM basis, which is much lower as compared to the industry average of 5.8x on TTM basis. Therefore, considering the decent dividend-related parameters, decent returns and conservative balance sheet, we maintain a “Buy” recommendation on the stock at the current market price of $2.250 per share, up 0.442% as on 7^th February 2020.
 

WAM Leaders Limited

 
NPAT up 201.9% Year Over Year: WAM Leaders Limited (ASX: WLE) is a listed investment company, which primarily invests in equities listed on ASXand provides investors with diversified exposure to a portfolio of undervalued growth companies. Recently, the company announced that Geoffrey Wilson, one of the Directors in the company, has acquired 40,862 ordinary shares for a consideration of $51,599.39, taking the total holding to 8,700,308 ordinary shares.
Portfolio Update and Financial Highlights: The investment portfolio increased 6.6% in the six months to December 2019,outperforming the S&P 200 Accumulation Index by 3.5%.
 
 

Performance of WLE’s Portfolio (Source: Company Reports)
 
The company reported a net profit from ordinary activities after tax amounting to $43.3 million, up 201.9% year over year. The company recorded an increase of 185.8% in operating profit before tax on a year over year basis, mainly due to robust investment portfolio performance and a rise in asset over the period. The company declared a full-year dividend of 3 cents per share and an interim dividend of 3.25 cents per share for FY2020.
 

December Quarter 2019 Key Metrics (Source: Company Reports)
 
Stock Recommendation: The stock of WLE is trading at $1.270 with a market cap of ~$1 billion. The stock is trending at the upper band of its 52-week trading range of $1.080 to $1.315. The stock has generated returns of 13.78% in the last six months. The stock has an annual dividend yield of 4.88% and a P/E multiple of 14x. Going further, the company will continuously seek new opportunities, irrespective of market conditions. Therefore, considering the decent dividend-related parameters, returns and current trading levels, we maintain a “Hold” recommendation on the stock at the current market price of $1.270 per share, down 0.781% as on 7^th February 2020.
 

WAM Research Limited

 
Higher Exposure to Consumer Discretionary and Financials Sectors in the Portfolio:WAM Research Limited (ASX: WAX) is an asset management company that invests in a diversified portfolio of undervalued growth companies. The market capitalisation of the company stood at ~$276.67 Mn as on 7^th February 2020.  Recently, the company announced that Geoffrey Wilson, one of the Directors in the company, has disposed 122,800ordinary shares for a consideration of $180,997.43, taking the total holding to 4,296,729 ordinary shares.
 
Portfolio Update of WAX in December 2019:  WAM Research investment portfolio gave a negative return of 1.1% in December 2019 as compared to S&P/ASX All Ordinaries Accumulation Index, which gave a negative return of 1.9%in December 2019. Hence, WAX portfolio outperformed the S&P/ASX All Ordinaries Accumulation Index by 0.8%.
 

Performance of WAX’s Portfolio (Source: Company Reports)
 
Change in Substantial Holding: The company recently informed that Wilson Asset Management Group increased its holding in Generation Development Group Ltd (ASX: GDG) from 6.44% to 8.14%. The company now holds approximately 10.2 million shares of Generation Development.
 
What to Expect: The company will continue to carry out investment activities, which is primarily investing in equities on the ASX to achieve its goals. The company's performance is dependent on the performance of the company's investments.
 
Stock Recommendation: The company’s Board continued to enhance shareholder returns through the payment of fully franked dividends of 9.7 cents per share in FY19. Ever since the company formed, WAM Research has paid 104.30 cents per share in fully franked dividends to its shareholders. The company currently has an annual dividend yield of ~6.74%. The stock of WAX is trading at $1.435 with a market cap of ~$276.67 million. The stock is trending at the upper band of its 52-week trading range of $1.210 to $1.525. The stock has generated a decent return of 7.46% in the last six months. The stock has a P/E multiple of 169.41x. The stock has a price to book value of 1.2x on TTM basis, which is much lower as compared to the industry average of 5.8x on TTM basis. Therefore, considering the decent dividend-related parameters, attractive valuations, decent returns, we maintain a “Buy” recommendation on the stock at the current market price of $1.435 per share, down 0.347% as on 7^th February 2020.
 
 
 
Comparative Price Chart (Source: Thomson Reuters)

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