I hear you I note that Geoff Wilson announced a monster profit...

I hear you
I note that Geoff Wilson announced a monster profit yesterday and he talked all investment performance. Makes sense he is at a 20 odd % premium so share price return has been artificially inflated. Now I can connect dots, see the impact of fees and tax in his portfolio and see how his portfolio performs in up and down markets
He did 1 for 1 options last year and his portfolio size grew double. So how is $90m profit on a $600m portfolio (someone would have to check the numbers) compared to $50m profit on a $300m portfolio…with double the number of shares on issue.
Fund managers have pretty strict rules and all have to calculate their investment portfolio performance very carefully. Their numbers are audited and If they get it wrong they can be in big trouble.
So, why is investment performance now the go for LICs? Because they have raised so much capital
How do you show the NTA performance of an LIC that went from 50m shares to 75m shares and issued new capital at either a discount or a premium? What if it were for options that existing shareholders bought 20% below the share price? That’s a 10% dilution. (is that the word?) So the investment performance will tell me roughtly- take a few % off for fees and tax and that- what the “adjusted” NTA growth was.
Because they have all issued so much capital they are mostly reporting investment portfolio performance. It’s actually a better guide and helps me see how they perform against indexes and other fund managers who don’t pay tax like LICs. Personally I am keen to see what the performance of Djerriwarrahs investments did because it is trading at a 25% premium to NTA. How much return is the market and how much from the investment portfolio? This matters to know if the manager is good and likely to perform in the future. The disclaimers say past performance doesn’t mean blah blah, but yeah, right
Sorry to make this long, but this is from WAMs media release- you’ll see its all talk about the investment portfolio- which gives an indication of the ability of the portfolio managers to performance.

Wilson Asset Management’s listed investment company, WAM Capital, has generated an after-tax profit of $68.3 million following the strong performance of its investment portfolio.
In an ASX statement WAM Capital said profit after tax was up 54.4 per cent for the year ending 30 June 2014, while pre-tax profit rose 68.8 per cent to $90.5 million.
Total shareholder return for the period was 30.7 per cent and the investment portfolio increased 19.2 per cent, outperforming the 17.6 per cent increase in the ASX All Ordinaries Accumulation Index over the same period.
WAM Capital chief investment officer Chris Scott said the company maintained an average equal equity weighting of 64 per cent and an average cash weighting of 36 per cent with the equity portion of the investment portfolio returning 28.1 per cent.
“It’s a strong risk-adjusted result for shareholders and underscores the success of our rigorous investment process,” said Mr Scott.
In terms of the outlook for the equity market, Mr Scott said he expects market returns in the near term to remain below longer term averages.
“Over the medium to longer term, our view of the market is more positive, contingent on increased economic activity resulting from historically low interest rates,” he said.
WAM Capital was well positioned to capitalise on opportunities in the market as they arise, “with a conservative balance sheet, a high cash weighting, no debt and a flexible and proven investment approach”, Mr Scott said.
“The company will continue to seek opportunities irrespective of market conditions, having achieved outperformance through various market cycles,” he said.

The reason I like LICs over Managed Funds is because you give a managed fund money and they buy their stocks, and up they go. When the market falls people want their money back and the manager has to sell, and the prices of illiquid stocks fall from their selling. SO for small stocks I prefer an LIC- never mind the dividend.

Long reply, short version was show me the investment portfolio I don’t have to adjust for capital events to see how they actually performed as a manager, which is what drives the share price.


Now as for the future, I am watching this earnings season very close