Insights

Wilson Asset Management believes these 2 leading small cap ASX shares are a buy

Superloop and Praemium are two of the small caps that WAM Microcap likes the look of.
The post Wilson Asset Management believes these 2 leading small cap ASX shares are a buy appeared first on The Motley Fool Australia. –

The fund manager Wilson Asset Management (WAM) has recently identified two top small cap ASX shares that it owns in its portfolio that could be ideas.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).

There’s also one called WAM Microcap Limited (ASX: WMI) which targets small cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets the most exciting undervalued growth opportunities in the Australian microcap market.

The WAM Microcap portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 25.2% per annum since inception in June 2017, which is superior to the S&P/ASX Small Ordinaries Accumulation Index average return of 12.2%.

These are the two small cap ASX shares that WAM outlined in its most recent monthly update:

Superloop Ltd (ASX: SLC)

WAM described Superloop as a leading telecommunications provider that owns and operates metropolitan fibre networks in Australia, Singapore and Hong Kong, connecting the regions’ key data centres and bandwidth intensive buildings.

During the month of October 2021, it announced the sale of its Hong Kong business and certain Singapore assets for $140 million, a 30% premium to the carrying value of the assets.

The fund manager said that this sale will allow the company to redeploy the proceeds generated from the sale in acquisitions that can add to earnings or capital management initiatives.

Superloop also said that in connection with the sale, it will maintain operations in Singapore and Hong Kong and enter into a 15-year indefeasible right of use on the existing or future expanding networks. This will allow the company to continue to participate in these markets and provide end-to-end connectivity services to Superloop’s INDIGO submarine customers in the region.

Praemium Ltd (ASX: PPS)

Praemium was described as a global leader in the provision of technology platforms for managed accounts, investment administration and financial planning.

The fund manager pointed out that the small cap ASX share services 300,000 investor accounts and manages over $170 billion in funds globally for more than 1,000 financial institutions and intermediaries.

In October, Praemium reported a record inflow of $1.7 billion for the three months ending 30 September 2021. That was 37% higher than the previous quarter. It also achieved record total funds under administration (FUA) of $45.6 billion.

Then, in early November 2021, the fintech company announced that it had received a takeover merger proposal from the financial services and technology business Netwealth Group Ltd (ASX: NWL).

If the takeover goes ahead, Praemium shareholders would be entitled to receive one new Netwealth share for every 11.96 Praemium shares, or receive a cash alternative.

The fund manager believes that the proposed merger, if implemented, will create substantial value for Praemium shareholders due to the compelling synergies it will produce.

The post Wilson Asset Management believes these 2 leading small cap ASX shares are a buy appeared first on The Motley Fool Australia.

Should you invest $1,000 in Superloop right now?

Before you consider Superloop, 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 Superloop 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

More reading

Here’s why Praemium (ASX:PPS) shares are up 10% on Wednesday

Why AMP, Eclipx, Paradigm, and Praemium shares are surging higher

Why is the Praemium (ASX:PPS) share price 15% higher on Tuesday?

Why Goodman, Praemium, Step One, and Telix shares are charging higher

ASX 200 (ASX:XJO) midday update: Netwealth’s merger proposal, IAG sinks

Motley Fool contributor Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Netwealth, Praemium Limited, and SUPERLOOP FPO. The Motley Fool Australia owns shares of and has recommended Netwealth. The Motley Fool Australia has recommended Praemium Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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