Stocks’ Details
 

WAM Capital Limited

Investment Update for March: WAM Capital Limited (ASX: WAM) provides investors with exposure to an actively managed diversified portfolio of undervalued growth companies, which are generally small-to-medium sized industrial companies. As on 20 April 2020, the market capitalization of the company stood at $1.47 billion. The company has recently provided an investment update for the month of March wherein it reported gross assets of $1,024.8 million with cash weighting of 32.6%. In the same time span, the company reported NTA (Net Tangible Asset) per share after tax of 158.45 cents and investment portfolio performance of 14.9% since inception. During the month, the company added its positions in agricultural companies and high quality businesses which are trading at depressed valuations.


Portfolio by Sector (Source: Company Reports)


Future Expectations and Growth Opportunities: Despite little growth in earnings, valuations of the company have expanded significantly. It is focused on preserving shareholders capital and is positive about the outlook for the equity markets.

Stock Recommendation: As per ASX, the stock of WAM gave a return of 7.65% in the past one month and is trading on its average 52-weeks’ level. During 1H20, gross margin of the company stood at 80.9% and net margin was 59.2%. In the same time span, Assets/Equity Ratio of the company went down to 1.01x from 1.03x in 2H19. This indicates that the business is financed with a more significant proportion of investor funding and a small amount of debt, resulting in a financially stable balance sheet. On the TTM basis, the stock is trading at an EV/Sales multiple of 0.4x, lower than the industry average (Investment banking and Investment Services) of 6.8x. Considering the returns, current trading levels, positive outlook and decent performance of the portfolio, we recommend a ‘Buy’ rating on the stock at the current market price of $1.88, down by 7.843% on 20 April 2020. 

Magellan Global Trust

Highlights for the Half Year:  Magellan Global Trust (ASX: MGG) is a listed investment trust which invest in global equities. As on 20 April 2020, the market capitalization of the company stood at $2.16 billion. The company has recently reported NAV (Net Asset Value) per unit of Magellan Global Trust of $1.8687 as at 17 April 2020. During March 2020, the company had fund size / NAV Price of $2,193.6 million / $1.7712 per unit. During 1H20, the Fund had net assets of $2,377 million and a net asset value of $1.92 per unit. In the same time span, total net investment income of the company went up to $210.6 million and reported a profit of $191.46 million. 


1H20 Financial and Operational Highlights (Source: Company Reports)

Future Expectations: The company is expected to come out of substantial and lasting shock to demand. MGG might prefer investments in the US, Switzerland, Denmark, the UK, Singapore and possibly Australia. The company aims to achieve attractive risk-adjusted returns over the medium to long term for unitholders, while reducing the risk of permanent capital loss.

Stock Recommendation: As per ASX, the stock of MGG gave a return of 5.78% in the past one month. During 1H20, gross margin of the company stood at 91.8% and ROE of the company was 8.3%. Considering the returns, decent outlook and improved margins, we recommend a ‘Buy’ rating on the stock at the current market price of $1.69, down by 2.874% on 20 April 2020. 

WAM Research Limited

Increased Liquidity of Portfolio: WAM Research Limited (ASX: WAX) provides investors with exposure to a diversified portfolio of undervalued growth companies. As on 20 April 2020, the market capitalization of the company stood at $226.71 million. The company has recently provided an investment update for the month of March 2020, wherein it reported gross assets of $170.7 million. The company has increased liquidity of its investment portfolio and continue to hold defensive companies with strong balance sheets. In the same time span, the company reported NTA after tax of 96.94 cents. The company has highest holdings of 40.7% in cash followed by 12.8% in industrial sector. 

 
Portfolio by Sector (Source: Company Reports)  
                                                               
What to Expect: The company remains focused on investing in undervalued companies which are positioned for growth. WAX has added companies which are well positioned to fare better after the downturn. 
Stock Recommendation: As per ASX, the stock of WAX is inclined towards its 52-weeks’ low level of $0.9, proffering a decent opportunity for accumulation. During 1H20, ROE of the company witnessed an increase over the previous year and stood at 4.9%. In the same time span, Assets/Equity Ratio of the company went down to 1.02x from 1.04x in 2H19. On the TTM basis, the stock is trading at a price to earnings multiple of 7.180x, lower than the industry average (Investment Banking and Investment Services) of 12.1x.  Considering the current trading levels, decent outlook and improved margins, we recommend a ‘Buy’ rating on the stock at the current market price of $1.17, down by 0.847% on 20 April 2020.

 
Comparative Price Chart (Source: Thomson Reuters)

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