AI assistant
WAM ACTIVE LIMITED — Annual Report 2010
Jan 12, 2011
66032_rns_2011-01-12_34f33ad5-ad31-4763-ba2c-62383ef32dae.pdf
Annual Report
Open in viewerOpens in your device viewer
WAM ACTIVE LIMITED
ABN 49 126 420 719
==> picture [144 x 103] intentionally omitted <==
13 January 2011
WAM ACTIVE LIMITED (WAA) YEAR TO DECEMBER 2010 RESULTS
“OUTPERFORMANCE AND INCREASED DIVIDEND”
Key Highlights
-
The gross portfolio increased 6.4% for the 12 months to 31 December 2010, while the S&P/ASX All Ordinaries Accumulation Index increased by 3.3%. This was an outperformance of +3.1%. The result was achieved whilst holding an average of 44.1% in equities and turning over the equity portion of the portfolio 7.2 times.
-
A 33.3% increase in the fully franked interim dividend to 4.0 cents per share.
-
Our trading strategy during the year has benefited from takeover arbitrages, capital raisings and short selling opportunities. Over the last 12 months the fund participated in 134 capital raisings. We traded 10 positions in stocks which were under takeover offer. We short sold stocks on 37 occasions. Our total number of stocks traded over the 12 months was 259. We believe that we are well positioned to perform in the current challenging market environment.
| Annualised Performance as at 31 December 2010 |
1 Year | 2 Years | Since Inception (Jan–08) |
|---|---|---|---|
| WAM Active Limited S&P/ASX All Ordinaries Accumulation Index Outperformance* |
+6.4% +3.3% +3.1% |
+30.5% +20.1% +10.4% |
+15.5% -4.9% +20.4% |
*The change in the portfolio before all expenses, fees and taxes.
Level 11, 139 Macquarie Street, Sydney NSW 2000 | GPO Box 4658 Sydney NSW 2001 | ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wilsonassetmanagement.com.au
Dividends
The Directors of WAA have declared a fully franked interim dividend of 4.0 cents per share to be paid as follows:
Ex Date: 17 March 2011 Record Date: 23 March 2011 Payment Date: 31 March 2011
The dividend re-investment plan will be operating at no discount. The current share price ($1.02 being closing price 12 January 2011) is a 14% discount to the estimated 31 December 2010 pre-tax NTA. To participate in the dividend re-investment plan, please send your election to our share registrar no later than the 23 March 2011.
==> picture [459 x 280] intentionally omitted <==
- annualised interim dividend
Options
WAA currently has 15,482,170 options on issue, which trade on the Australian Securities Exchange under the code WAAO, have an exercise price of $1.15 per option and can be exercised any time up until the expiry date of 30 April 2011. The reason behind the option issue is the Board’s vision to grow the market capitalisation of WAA to $100m over the next 4 years and to continue to generate strong results.
Level 11, 139 Macquarie Street, Sydney NSW 2000 | GPO Box 4658 Sydney NSW 2001 | ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wilsonassetmanagement.com.au
Market Outlook
Calendar year 2010 proved to be another strong year for capital raisings in the Australian market. Over the year $56 billion of equity was raised by Australian companies. This added to the $109 billion raised in 2009, leading to a significant deleveraging of Australian companies balance sheets. Companies will need to deploy this capital to earn a return for their shareholders. With subdued organic revenue growth, we believe companies will try and ‘buy growth’ resulting in an increase in mergers and acquisitions this year. This will benefit WAM Active as mergers and acquisitions often provide arbitrage opportunities for the fund to generate solid risk adjusted returns.
Over the 12 month period the fund participated in 134 capital raisings (123 placements and 11 IPO’s). The majority of these capital raisings were in the second half of the calendar year. In this period the S&P/ASX Small Resources Index was up a colossal 46.7% which supported a plethora of capital raisings by junior mining companies as they took advantage of their strong share prices to raise funds. While there will continue to be opportunities to participate in capital raisings, we believe the volume of these in the year ahead will be down on 2010 levels.
In November 2010, we saw QR National the largest IPO since Telstra successfully listed on the ASX. On the back of this successful listing, we believe there will be an increase in the number of large IPO’s this year. One of these is the touted listing of television network Nine Entertainment. This deal could be worth up to $5 billion.
Heading into the new calendar year we remain cautious despite the rally in equities since July 2010. We remain concerned about a bubble forming in the mining sector, especially among smaller resource stocks, with many leaping by more than 100 per cent in just six months. In recent months, the Chinese Government has been forced to lift interest rates and restrict lending practices to try and cool the economy. Any slowdown in China could drastically affect commodity prices. If this occurs it will provide resource short selling opportunities.
We expect the major trading opportunities in the next twelve months will be focussed on corporate activity, capital raisings and short selling.
For further information please contact Geoff Wilson, Matthew Kidman, Chris Stott or Martin Hickson on (02) 9247 6755
Level 11, 139 Macquarie Street, Sydney NSW 2000 | GPO Box 4658 Sydney NSW 2001 | ABN 49 126 420 719 Phone 02 9247 6755 | Fax 02 9247 6855 | [email protected] | www.wilsonassetmanagement.com.au