161108-zentih-awards-wilsonGeoff Wilson. Photo: Matt Fatches

Category: Listed investment companies (LICs)

Winner: Wilson Asset Management

Analyst: Dug Higgins

Sector overview:
LICs continue to enjoy a period of renewed interest over the last four years. Given the large number of capital raisings and IPOs that have taken place, the universe of strategies continues to broaden. Zenith believes the LIC structure has the potential to produce benefits that enhance overall return, particularly given the structure tends to negate the impacts of continual capital flows on performance. Many of the older, larger LICs, while not as active in their portfolios, can be obtained at a very competitive cost, effectively offering active strategies at close to (or even below), index prices.

Zenith says …
For more than 15 years, Wilson Asset Management (WAM) has been a stalwart of the LIC industry. WAM offers a suite of quality LICs with a strong absolute return approach, spread across the full spectrum of sector and market capitalisation ranges. WAM continues to be highly regarded by Zenith in terms of portfolio performance and also shareholder engagement. This is an area we see as a critical facet of operating LICs, given shareholder dissatisfaction can drive share prices away to heavy discounts from portfolio values in difficult markets, despite investment strategies remaining sound.

Geoff Wilson
Chairman and portfolio manager
Wilson Asset Management
Over the past 18 years, as an organisation, we’ve always worked to make a difference with the money we manage, and in the community we operate in. The only way that’s possible is by having a really high-quality team. Our chief executive officer, Kate Thorley, leads the organisation, and Chris Stott is chief investment officer, but it’s significantly more than that. It’s the 21 people we employ. It’s really all their efforts that culminate in something like this. We’ve got a specific way of investing money and it’s been the same for 18 years. Rule number one is, don’t lose money. And rule number two is, remember rule number one. How we manage shareholders’ money is that we will sit in cash unless we find an opportunity that we believe we can make money on. Our default position is holding cash, and over the past 18 years we’ve probably averaged about 34 per cent cash, which is very high, but it’s just how we manage our money. To me, it’s the people and the process, and it’s not one individual thing that’s happened in the past 12 months or 24 months, even though we’re very bottom-up and we’re very aware of what’s going on from a top-down perspective. We rate companies and we have about 1500 company visits a year, but when a company appears on our rating system we will only buy it when we can see a catalyst that will change the valuation. That’s always the same – we’re always looking for catalysts. We’ve had little exposure to the top 50 stocks, because there was little value up there.


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