Welcome to the third WAM Strategic Value Limited Annual General Meeting. This is a hybrid meeting held both online and in person here at the Museum of Sydney. I'd like to acknowledge the Gadigal people of the Eora Nation and pay my respects to elders past and present. Thank you for joining us and for your support of WAM Strategic Value. Before we begin, a disclaimer will be displayed on the screen. If you can, please read that. Get that disclaimer up. Thank you. I'm Geoff Wilson, Chairman of the Board of Directors, and joining me here today are my fellow directors, Kate Thorley, Virginia Waterhouse, and Glenn Burge. Acting in capacity of moderator is Wilson Asset Management Head of Finance, Ophelia Lam. She'll be assisting in addressing any questions received during the meeting.
Scott Whiddett, as a representative from Pitcher Partners in the front row here, is with us and will be available to address any questions relating to the company's financial statements. As it is just after 9:15 A.M. and the quorum is present, I declare the meeting open. The notice of meeting has been circulated to shareholders, and in the absence of any objections, I'll proceed on the basis that the notice has been taken as read. I encourage you to read the Chairman's address, which we emailed out to shareholders. So if you didn't get the email, please go on the Wilson Asset Management website and register for our emails, and also was sent to the ASX early this morning. Shareholders who have logged into the webcast with your username and password will have the opportunity to submit questions online and ask audio questions, as well as vote on all resolutions.
If you're joining us online, questions can be submitted at any time. For those shareholders that do join us online and wish to ask a verbal question, an audio question facility is available during the meeting. Obviously, for everyone who's joining us in person, can we ask questions the old-fashioned way of raising your hand, and then we'll bring a microphone to you? Voting today will be conducted by way of poll on all items of business. When I open the poll, the voting icon will appear on the navigation bar, and simply select one of the options and cast your vote. If you change your mind, then please select another option. I'll now declare open all the items of business, so you can vote at any time during the proceedings until I declare the voting closed. I'll give you a clear prompt of when that will be the case.
In terms of the Chairman's address, I said for the detailed Chairman's address, please go to the email you sent us or to the ASX. In terms of just pulling out some dot points, let me cover a few things. Firstly, as a shareholder myself and as you're all shareholders, we are disappointed that the, well, if we're still buying, we're probably not disappointed. But if we're not buying, we're disappointed that the share price isn't trading at NTA or a premium. In terms of the performance of the portfolio for the last 12 months, sorry, for the period we're reporting on, that's the period to financial year 2024, the portfolio performed very soundly over that period. Obviously, that gave the board the confidence to increase the dividend as the profit reserve increased.
You'd be aware that the fully franked dividend was about a little over 5.2%, which gives you a grossed-up dividend yield of about 7.4%. The plan will be to continue to grow that profit reserve and to grow that dividend over time. Also, the focus of the manager and also the focus of the board directing the manager is to continue to fix up that imbalance of supply-demand, where at the moment there's more supply than demand, and the share price is trading at NTA. You'll see there on the slide that we've noted the current pre-tax NTA of AUD 1.27, and also that if you look through at the companies that WAM Strategic invested in, if you look at their stated NTAs, you get a see-through NTA of AUD 1.42. We included that in there. Really, it was a request of one of our shareholders.
So on a monthly basis, we show you that. So you could fairly argue that over time, you'd expect the share price to be trading in between those two figures. One is the AUD 1.27, which are the assets that, in theory, are the current liquid asset backing, and the AUD 1.42 is assuming our investments all do trade at stated NTA, well, what our belief of the NTA is, then that's the value of the assets of the underlying company that we will get over time. In terms of the formal part of the meeting, I'll now move to that, and there are four items of business for the AGM today. Three of those will be voted on. The notice of meeting was circulated to shareholders, and in the absence of any objections, I'll proceed on the basis that these items are taken as read.
I note Boardroom are the returning officer for today's meeting and will conduct all of our poll. I further note Resolution 1 is subject to voting exclusions, as outlined in the notice of meeting. The board recommends approval of each resolution, and as chair, I'll be voting all open votes provided to me for each resolution. We'll advise the ASX as soon as the results are available later on today. You may submit any questions you have on the financial report, our financial statement and report now, and the first item of business to receive and consider the financial statement, the director's report and the auditor's report for the company for the year ended 30th of June 2024. I mentioned earlier Scott Whiddett, who I pointed out is in the front row here from Pitcher Partners, is here if there are any specific questions.
There's no resolution on this matter. Do we have any questions? Why don't we go online first? Any questions online, Ophelia?
Nothing online, but we do have a general business question, which we'll ask at the end of the meeting.
Thank you, Ophelia. Are there any questions in the room? No. So let's come to the items of business that require a vote. Resolution 1 relates to the adoption of the remuneration report. Are there any, sorry, for the people online, can you please submit any questions you have on Resolution 1 now? Proxies for Resolution 1 are up there. This year, we didn't announce the proxies before the AGM. Going forward, Stephen Mayne came up with a very good suggestion at the previous annual general meeting, and we'll be doing that going forward. Do we have any questions online?
No questions.
Yes. Any questions in the room? No. You've seen the proxies. As there are no further questions, I now put the motion that the resolution be approved as set out in the notice of meeting. If you're a shareholder or proxy holder, enabled to vote online or in the room, please vote. Resolution 2 relates to the re-election of Director Glenn Burge. Glenn, would you like to say a few words?
Yes. Thank you, Geoff. I'm standing for re-election as a director of WAM Strategic Value. I was originally a director at the IPO and seek re-election for a term. Obviously, as a director, I'm responsible for the oversight in terms of ensuring compliance with all matters relating to the Corporations Act for the entity, ASX rules, and the audit function and other than that, obviously, as a director, keeping an eye on the portfolio and regular board meetings, asking questions around the performance of the portfolio and management strategies in terms of, as Geoff said earlier, strategies to actually ensure that we can improve the performance to narrow the gap of the discount to the NTA and hopefully can get to the situation where there's a premium over time and the other key item has been dividend policy.
We do seek as the independent directors to ensure that, firstly, we have the actual profit reserves and franking credit reserves to be able to continue to increase dividends, and that obviously requires Geoff and the team to be paying close attention to those stocks in the portfolio to ensure that there's a capability to generate a stream of dividends to or to allow that to pass on to you as shareholders. Thank you, and if there's any questions, perhaps now.
Yes. And just before we go to questions, thanks, Glenn. From myself sitting on the board, Glenn brings nearly four decades of wealth of experience, of intimate knowledge on the equity markets. And to me, I know there's some older shareholders in the room and online and some younger shareholders as well. And what is invaluable is that just high-quality financial markets experience. And also, I think Glenn is intimately involved in the market and sort of definitely keeps us, does question us probably all very vigorously about the portfolio. And in terms of from our perspective, Glenn's a great asset to have someone of his experience and quality on the board. So do we have any questions online?
Nothing online, Geoff.
Any questions in the room? No? So in terms of the proxies, the proxies can, so obviously, anyone in the room, please vote. And anyone online, please vote now. And I now put the motion that Mr. Glenn Burge be re-elected as set out in the notice of meeting. The next resolution is Resolution 3, and that's to elect Director Virginia Waterhouse to the board. Actually, have we got another. Glenn's microphone wasn't working that well. So if we can now pass to Virginia, if you can just give us a little bit of your background, because I know Glenn's been on the board for a couple of times. This is new for shareholders. And I mean, from my perspective, Virginia, we specifically wanted someone that had the legal background. And we spent. Well, actually, we spent pretty much since the IPO looking for this person.
We're very happy that from our perspective, it did take us time, but we're very happy with you joining us, Virginia. Thank you.
Thank you, Geoff. Can everyone hear me? Is this working okay?
Yeah.
I'm also going to apologize in advance if I've sounded a bit cranky. I actually lost my voice earlier this week, but thankfully, it's made a triumphant return for today. I joined the board approximately 12 months ago as an independent and non-executive director to keep Glenn company. And obviously, I've got to repeat what Glenn said because he said it so well. I'm also the ARC chair of the company. So this is my first AGM. And pleasingly, it won't be my last. So thank you all for not voting me off the island. A little bit about me: I'm a corporate lawyer of 30 years' experience. I've worked across mergers and acquisitions, capital raising, governance, and more recently, cybersecurity. I've worked across a number of sectors, including energy, financial services, and technology.
I've also served as a non-executive director on a number of companies in those different sectors. Sorry, guys. I also have a really, a passion for technology, and particularly the way technology, and I guess AI is a really good example, of the way technology can really amplify people and their performance and potential, and obviously how that benefits the organizations they work for. But I guess, as all of us know, with technology comes risk, particularly risk around cybersecurity and the protection of sensitive data. So I'm hoping that I can add my skills and experience to that of the board going forward, and also to the very deep and capable experience that already exists in the management team. So thank you very much, everybody.
Thank you. Thank you very much, Virginia. I think you did a good job, a solid job there with the voice. In terms of proxies, can we show the proxies on the screen, please? And going forward, we'll be announcing them to the ASX before the meeting. Are there any questions online?
Nothing yet.
Any questions in the room? No? So please, everyone in the room, can you please vote now? And also, anyone online, can you please vote? I now put the motion that Miss Virginia Waterhouse be elected as set out in the notice of meeting. Thank you. We've now addressed the three resolutions. And just for anyone online who hasn't voted, I'm just giving you a warning that we will be closing the poll soon. So if you can please vote. And now we'll just go to any other general questions. I think we've got, actually, why don't we take them in the room first? Any general questions, and then we'll take them online. Are there any general, yes, please. We just need, Hannah will run the microphone to you. Thank you.
Yes, Geoff. This is a very novel idea you've come up with, this portfolio. Just a question, well, two questions, actually. First of all, a lot of the candidates that you might invest in are also your own funds. And I'd just sort of like you to tell us how you approach that, whether you see any conflicts of interest. And the other thing is that once you've gone around and eradicated all the discounts, are you then going to wind the vehicle up? What is your plan there? Or will you just start to do the ones that have the smallest premium?
Okay, so two questions. I'll start with the first one. Our plan is not to invest in our own listed investment companies. There have been instances where we've invested in another listed investment company, and one of the WAM entities has bid for it. And the first one was, WAM Strategic Value had a position in Templeton Global, and WAM Global bid for it. And as the investment manager, we decided to, instead of taking the cash, we took the shares. It was about a 6% differential. We were 6% better off by taking the shares. The plan was that we would then sell the shares. The unfortunate thing is the shares, we weren't the only ones that had that plan. And they went to a discount. This is WAM Global shares. And they went to a 20% + discount. And now the discount is narrowing.
What's WAM Global at the moment, the discount? Be about 11%. Yeah, it did get to about an 8% discount. So we're pretty comfortable that it'll get to NTA over time. And then we'll roll out. There's no, the amount of money or assets that are invested in WAM Global, we don't get a management fee on. As in, so it would actually be in our interest if we didn't own any, as in the manager. But, well, obviously, we want to maximize the return. And so that's our plan there. And also, we did have a position in Ozgrowth and Westoz and went WAM Capital bid for that. Pretty much after the WAM Global thing, the investment manager's strategy was to, if one of our other entities bids for any of these companies, then we'll either accept and sell or take the cash alternative. And that was QV Equities.
We took the cash alternative. That's been pretty much the plan. So that's where that fits in. So the plan is not to own the other vehicles. So when WAM Global eventually gets closer to NTA, then we'll roll out of that. In terms of the question about probably the listed investment company space, that is not the only place we invest in. What we're trying to do is buy undervalued assets. And one of our better performers last year was our position in Global Data Centres, which ended up winding up, and we made probably 100% of our money over the period on that. In terms of, yeah, so we do have flexibility, but there are discount asset plays. What also, in terms of the LIC sector per se, I think we're down about 87 LICs. It did peak at 114. To me, it's just a cycle.
Everyone says, "What is the long-term outlook for listed investment companies?" To me, it's as rosy as it was 10-20 years ago it is now. I remember when we floated WAM Capital 25 years ago, I think there could have been 34 closed-end funds, obviously AFIC and Argo the biggest two, and there has been a lot of evolution and rationalization. To me, it's just a rationalization period. The interesting thing is there's been some new closed-end funds coming to the market. The Pengana did a raise some money in the last six months for an IPO of a new listed investment structure, and to me, there'll be more, so it's just an evolution of the market, and they go up premiums and discounts. Now, do I think there'll be a situation where they never traded a discount? I don't think so.
Yeah, I think there'll always be an opportunity because what happens is it's a very simple, why does a company trade at NTA? It's when supply and demand are in equilibrium. Now, why does something trade at a premium? You were at the AGM earlier. Why does WAM Research trade at a 58.5% premium 2.5 years ago? And it's probably, well, from my perspective, is WAM Research took us the of all our LICs, it was the longest one. It traded at a premium at NTA soon after the IPO. Then it went to a discount, and it took us seven years to get it back to trade at NTA. That was the longest one.
Over that period of time, of course, you're working on removing the supply, the selling, getting new buyers, getting people to understand what you're doing, and have your expectations - the expectations are aligned with what the company can deliver. And so what that ends up doing is effectively tightening up your shareholder base because it took us so long, and we worked so hard on it, then pretty much no one wanted to sell. Even if it was trading at - I think with WAX, it was trading at a 20% premium. I sold all my WAX. But then it kept going up because there just wasn't the supply. So to me, there will be - and a lot of people see the listed investment company space, fund management, a great opportunity to get permanent capital. It's actually not permanent capital because it's capital owned by shareholders.
If you don't perform for shareholders, then that capital gets taken away from you. But as we saw back in 2000, you're old enough, when was it? 2000 and, oh, when was it? Was it 2002, 2003? Yeah, a lot of. I think there were 30 LICs listed within a 12-month period. And then most of them don't exist. And we saw that over the last decade. We saw a lot of new ones. The new fund managers think, "Oh, great. It's an opportunity to get permanent capital. I just get the permanent capital. I'll leave it there and don't do anything with it." And I mean, we understand that you've got to have, for an LIC to prosper, you have to communicate with shareholders, engage with shareholders, market, etc., etc. And so we've got a big team that does that, where most of the other managers don't do that.
So new managers will come along. They'll see what they believe is the holy grail. They'll float an LIC. They'll let it go to a discount, then they'll give up. So to me, unfortunately, yeah, I'm sure there'll be a lot more opportunities in both our lifetimes.
Yeah. Well, yeah, that's short-term you're speaking there. But anyway, is the fund actually mandated to sell when the investment reaches NTA? Or do you have some decision-making?
It's like, yeah, I'm the portfolio manager, so it's flexibility. Yeah. So yeah. I mean, what we've grappled with is if it's trading, say, at a 10% discount, should we sell that and buy something at a 20% discount? So if we need the money - at the moment, we've got about 18% cash. We just got some of the global data centers money back, and we expect to get the rest of that back soon. So we think there's an opportunity in one of our other entities that we can utilize some of the cash.
And funds that you're shorting, they're likely to be more volatile, of course. Do you?
We're shorting.
Sorry?
We're shorting.
No. No. The funds you invest in, if they're long-short funds, is that a candidate for you, or do you only do long funds?
To me, it's any listed investment. They can be. I mean, effectively, the long-short funds, that sector's pretty much gone from the LIC market. It's not a great product to be listed. Like Justin had his. We had one of the boys in Melbourne. Well, yeah, what was it called? Yeah, AEG that we ended up taking over. Yeah. To me, investors tend to want yield or directional, I think.
Yeah. So you're unlikely to invest in a long-short fund regardless of the NTA?
Oh, no, no. If there's a long-short fund, is there anything in particular you're thinking of? But there's no problem. If it's a long-short fund that's listed and it's trading at discount NTA, yeah, we'd definitely look at it.
Yeah. Okay. I just thought that long-short funds, there are still a few, I think, but they're likely to be more volatile. And I guess your objective is to help the fund as an activist, similar to Sandon Capital, to help them increase the, sorry, to reduce the discount.
100%. We'd be happier if we bought a big position in the shares, and then they went and traded at NTA, then we sold them, and then we wait for them to go to a discount again and bought them again and then sold them.
Well, just because you sell them, they're probably going to do a discount straight away.
Yeah. Look, thanks for that. Any other questions in the room online?
We've got one question, Geoff, from Ador Properties Limited. The question is, why are incentives paid when the value of the shares is less than originally issued?
Yeah. No. Thanks for that. And just on that is, effectively, you've got the share price, and then you've got the assets. And it's probably a little bit like we were talking earlier. The manager is paid the management fee and the performance fee are on the managing of the assets. And then separate to that is you've got the share price. Now, I mean, should we do it? Should we do the management performance fee on the share price? I'm not sure because then you sort of get a whole significant conflict. I mean, that's how it's structured, but that's why. I know we're just pretty much on time. Any other questions? Okay. So I'd like to close by thanking all the shareholders. Thank you for your support. We really appreciate it. And thank you for the board for your guidance.
We also closed the poll, Geoff.
Oh, and just before I close, I'd like to close the poll. Thank you. Thanks very much.