Transcription of Finance News Network Interview with WAM Microcap (ASX:WMI) CIO Chris Stott.
Carolyn Herbert: Hello I’m Carolyn Herbert for the Finance News Network Joining me from newly listed investment company WAM Microcap (ASX: WMI) is Chief Investment Officer, Chris Stott. Chris welcome to FNN.
Chris Stott: Thank you.
Carolyn Herbert: Now can you start by giving us an introduction to WAM Microcap?
Chris Stott: WAM Microcap is a newly created listed investment company, listed on the ASX, which is focused purely on investing in companies under $300 million of market cap. And we are typically looking for growth companies in that area, companies that can graduate to be small to mid, to large caps over time.
Carolyn Herbert: And Chris, now to your listing. How much was raised?
Chris Stott: We ended up raising $154 million, which was an oversubscribed offer at $1.10 per share so certainly the interest we had in the particular IPO was very, very strong and it certainly had a pleasing start on the first day of trading, trading slightly above that that $1.10 issue price.
Carolyn Herbert: Very good. And now to the fund, can you tell us more about your objectives and what investors can expect?
Chris Stott: We are looking for those growth companies and those growth companies with a catalyst. Typically growing at one and a half to two times PE and they’ve got to have a catalyst, something that we think in the market size, that will re-rate the share price over time. So companies like Reckon (ASX:RKN) and PSC Insurance (ASX:PSI) certainly fit the criteria for the portfolio. Capitol Health (ASX:CAJ) is another one. So we are typically looking for those companies that we well managed, in good industries and are growing no matter what the economy is doing.
Carolyn Herbert: And Chris, what is it about micro caps that makes them attractive to investors?
Chris Stott: Look certainly it is a very under researched area of the market, where this is not as much interest or stock broker research or coverage of that micro cap space. So it is quite labour intensive. Company visits are important in terms of getting to know various potential investee companies. So it’s very much an un-discovered part of the market, which is something that really excites us over time.
Carolyn Herbert: And can you tell us a bit about your stock selection process?
Chris Stott: Look certainly we’ve got the flexibility to be able to hold high levels of cash and typically with our other mandates we’ve held around 30 per cent cash over time. And this will be a similar example of that we’re absolute return focused, generally holding high levels of cash, holding 20 to 60 companies at any one particular point in time, utilising our proven investment process that has been with us now at Wilson Asset Management for almost 20 years.
Carolyn Herbert: And finally, Chris, what message would you like to leave for shareholders?
Chris Stott: We’d really like to thank all the shareholders that have supported us with this particular capital raising for WAM Microcap (ASX:WMI). Now certainly it comes down to us to perform over time and to pay a steadily rising stream of fully franked dividends to shareholders over time and that’s one of the key objectives of the product.
Carolyn Herbert: Chris Stott, thanks for the update and congratulations on the listing.
Chris Stott: Thank you very much.