Why did this LIC just reach a new high? We take a closer look
The post WAM Capital (ASX:WAM) share price hits 52-week high amid investment update appeared first on The Motley Fool Australia. –
The WAM Capital Ltd (ASX: WAM) share price has enjoyed a pretty fabulous day of trading on the ASX boards this Thursday.
At first glance, WAM’s gain of 0.42% to $2.39 a share doesn’t seem that noteworthy. It didn’t even do as well as the S&P/ASX 200 Index (ASX: XJO), which closed up 0.54% to 7,311 points.
But when you consider that $2.39 is WAM Capital’s 52-week high, you can understand why some WAM Capital shareholders might be in a celebratory mood today.
It comes after Wilson Asset Management (the WAM in WAM Capital) released its latest investment update. Wilson releases an update for all of its listed investment companies (LICs), including WAM Capital, every month.
And today, the update for September dropped at around midday.
What did Wilson say about WAM?
To kick things off, Wilson reported that WAM Capital’s net tangible assets (NTA) per share stood at $1.98. That’s up around half a percentage point from the $1.97 per share that this LIC reported last month for August.
Since they are what’s known as closed-ended investment vehicles, an LIC can either trade at a premium or a discount to its underlying NTA. Usually, LICs with a strong performance history or high dividend yields command a premium. Conversely, LICs that don’t enjoy as much investor confidence can trade at a discount.
We can probably put WAM Capital in the former camp. That’s because even though WAM Capital only had $1.98 in assets per share as of 30 September, it was trading with a share price of $2.37.
At today’s price of $2.38, this LIC now has a premium to its underlying NTA of around 20%.
WAM also told investors that WAM Capital managed to outperform the All Ordinaries Total Accumulation Index (ASX: XAOA) over September. It also announced that it has added to its profit reserve (from which it pays out dividends).
This LIC now has 28.2 cents per share in its reserve. That’s up from 27.9 cents last month. Since WAM Capital’s annual dividend is sitting at 15.5 cents per share, this indicates WAM has enough gas in the tank to fund it for at least another 12-18 months.
At the current WAM Capital share price, this LIC has a market capitalisation of $2.09 billion. It also has a dividend yield of 6.5%.
Should you invest $1,000 in WAM Capital right now?
Before you consider WAM Capital, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and WAM Capital wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.