Shared from the 1/19/2021 Financial Review eEdition

WAM Capitalises on winners

Industrials

Wilson Asset Management portfolio manager Oscar Oberg is taking an optimistic view of ASX-listed industrial stocks in 2021, having successfully ridden the e-commerce wave for listed investment company WAM Capital last year.

WAM Capital declared a fully franked interim dividend of 7.75¢ a share yesterday, with a portfolio return of 22.8 per cent for the half, outperforming its benchmark by more than 7 percentage points.

The dividend represents an annualised fully franked yield of 6.9 per cent.

“Given a lot of cyclical [and] value companies are comping very, very low numbers from a year ago and the way things have panned out with the US election, probably the last piece of the puzzle was the successful roll-out of the vaccine,” Mr Oberg said.

“We do see quite a positive environment for the industrial stocks over the next 12 to 18 months assuming a successful rollout of the vaccine.”

That perspective supports positions in Breville, Codan, Fletcher Building and Elders, as well as 2020 float Maas Group. Mining services should also deliver credible results this reporting season in light of thumping commodity prices, favouring Imdex, Seven Group and Emeco.

“Maas is a good starting point, it should benefit from a very strong outlook for regional infrastructure,” Mr Oberg said.

He’s also positive toward Downer, which has been looking to sell a number of capital intensive mining businesses over the last six months.

“The balance sheet is in very good shape.”

Ingenia – one of the few acquirers of tourist parks – is another business favoured by the manager, who agrees the outlook for its manufactured housing arm is strong, too.

Temple and Webster, Redbubble and Kogan were the strategy’s best performers last year.

“We’ve definitely reduced our weightings there.

‘‘It’s going to be tough for these companies to continue the momentum they had in 2020 as investors look forward,’’ Mr Oberg said.

‘‘In saying this, we do see a structural change towards more online.”

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