Why Geoff Wilson thinks Australian Leaders Fund Limited is an...

Why Geoff Wilson thinks Australian Leaders Fund Limited is an opportunity

Tristan Harrison | March 19, 2018 | More on: ALF WAM
There are few investors in Australia with a better investment record than Geoff Wilson in Australia. For those readers who don’t know, Mr Wilson is the name behind Wilson Asset Management. WAM runs some of the most successful listed investment companies (LICs) in the country like WAM Capital Limited (ASX: WAM).
We don’t often get much of an insight into how some of the richest Australians invest, but Geoff Wilson is a director of Australian Leaders Fund Limited (ASX: ALF), so an announcement is made each time his entities acquire shares. Today, it was announced his entities increased the holding of Australian Leaders Fund by around $30,000. He has been buying a few parcels of shares in recent weeks.
Australian Leaders Fund is a listed investment company (LIC), its fund size is around $311 million. It invests in domestic and international shares and it has outperformed the index since inception by a decent margin.
However, it operates differently to most other LICs because it has significant ‘short’ positions in companies it believes are overvalued and are in structural decline.
In its FY17 annual report it revealed that some of its largest positions were Ramsay Health Care Limited (ASX: RHC), Merck & Co, Auckland International Airport Ltd (ASX: AIA) and Facebook.
Geoff Wilson likes to buy things when they’re undervalued. In its latest NTA announcement, Australian Leaders Fund said that its post-tax NTA was $1.21, yet its share price is $1.03 today. This suggests a discount of 15%, which is a very attractive discount.
Foolish takeaway
Ultimately, I think performance needs to be taken into account alongside a discount or premium to the NTA. Over the past two years the Australian Leaders Fund portfolio has returned a net 1.1% per annum over the past two years. Past performance is not an indicator of future performance, but I’d rather own one of the WAM LICs at the current prices, even at the premium.