Wilson Asset Management (WAM) is planning to launch a new listed investment company (LIC) called WAM Strategic Value. Should you be interested?
What’s the new offering?
WAM is planning an initial public offering (IPO) of a LIC that could be launched next month according to Geoff Wilson AO, who is the Chair and chief investment officer (CIO) of WAM.
What’s it going to do? In WAM’s words:
“WAM Strategic Value will focus on identifying and capitalising on share price discounts to underlying asset values of listed companies, primarily listed investment companies (LICs), listed investment trusts (LITs) and other closed-end investment vehicles.”
Mr Wilson himself will be the lead portfolio manager of the new LIC.
Who can take part in the WAM Strategic Value IPO?
All members of the Wilson Asset Management ‘family’ will receive a priority allocation in the offer. Full details will be contained in a prospectus that will be issued by WAM Strategic Value when the IPO is launched. WAM expects to lodge the prospectus with ASIC in early May 2021 and the offer will close in early June 2021.
Is the LIC going to be a good one?
WAM runs some of the largest LICs, with a few being among the best of their respective investment sectors.
WAM Leaders Ltd (ASX: WLE) is doing well with ASX blue chip shares. WAM Microcap Limited (ASX: WMI) has generated large performance by targeting small caps. WAM Research Limited (ASX: WAX) and WAM Capital Limited (ASX: WAM) have been effective at targeting medium and smaller businesses, whilst also paying big dividends. Other LICs include WAM Active Limited (ASX: WAA), WAM Global Limited (ASX: WGB) and Wam Alternative Assets Ltd (ASX: WMA).
The idea of investing in closed-ended businesses that are trading at an attractive discount to their net tangible assets (NTA) could be effective. If the underlying NTA can approximately achieve market returns and the WAM investment team can trade in and out of LICs (and the like) as discounts close up then it could lead to decent outperformance, with a fairly high level of dividend income.
I think WAM Strategic Value could certainly be one that could attract income seekers, but it will partly depend on the amount of management fees. I’ll consider it for my own portfolio. Fees of this LIC, combined with the fees of the underlying investments, could be quite detrimental to long-term returns if both sets of fees are quite high.
There are other ASX dividend shares that are listed on the ASX right now that could be worth taking a look at.
