WAM Active’s Legal Battles and Market Discount Pose Risks Despite Strong Returns

Strong Portfolio Performance Amid Market Volatility

WAM Active Limited (ASX – WAA) has released its audited results for the financial year ended 30 June 2025, showcasing a standout 26.4% return on its investment portfolio. This performance significantly outpaced the S&P/ASX All Ordinaries Accumulation Index, which rose 13.2%, and the Bloomberg AusBond Bank Bill Index (Cash), up 4.4%. The company’s active investment strategy, focused on exploiting market mispricing and corporate transactions, continues to deliver compelling returns for shareholders.

Despite the strong portfolio gains, WAM Active reported a 10.6% decline in net profit after tax to $7.42 million, primarily due to increased performance fees, which rose to $2.9 million, and elevated legal and professional expenses totaling $1.6 million. These costs reflect the company’s ongoing efforts to manage complex corporate situations, including litigation related to Keybridge Capital Limited.

Dividend Stability and Capital Growth

The Board declared a fully franked final dividend of 3.0 cents per share, maintaining the full year dividend at 6.0 cents per share. This represents a fully franked dividend yield of 7.5% and a grossed-up yield of 10.7% based on the 30 June 2025 share price of 80 cents. The company’s net tangible assets (NTA) before tax rose 6.3% to 86 cents per share, reflecting both capital appreciation and disciplined capital management.

WAM Active’s dividend reinvestment plan remains in operation without a discount, allowing shareholders to compound their investment at the prevailing market price. Since its inception in 2008, the company has returned over $61.5 million in dividends and franking credits, underscoring its commitment to delivering income alongside capital growth.

Active Management and Market Opportunities

The company’s investment team, led by Oscar Oberg CFA, increased portfolio turnover to 8.8 times, the highest since inception, capitalizing on heightened market activity. WAM Active participated in 41 corporate transactions during the year, more than doubling the prior year’s 18 deals. Notable IPOs included the relisting of Virgin Australia Holdings and the debut of Greatland Resources, both of which closed materially above their issue prices, signaling renewed capital markets momentum.

Sector exposures remain diversified, with significant weightings in Financials (22.1%), Industrials (16.9%), and Information Technology (14.6%). The portfolio also includes strategic positions in uranium miners, reflecting a thematic focus on decarbonization and rising commodity prices.

Governance, Advocacy, and Legal Challenges

WAM Active’s governance remains robust, with a Board led by Chairman Geoff Wilson AO. The company continues its advocacy on behalf of retail investors, addressing issues such as superannuation tax reforms and market fairness. Philanthropic initiatives also remain a core focus, supporting social impact through related entities.

However, the company faces ongoing legal proceedings related to Keybridge Capital Limited, including recovery efforts and corporate governance disputes. WAM Active has provided bridge funding to Keybridge as part of a strategy to preserve asset value and protect shareholder interests. These developments inject a degree of uncertainty, though management remains confident in the long-term value proposition.

Outlook

Looking ahead, WAM Active anticipates a declining interest rate environment that could stimulate further capital markets activity and investment opportunities. The company’s flexible cash mandate and active trading approach position it well to navigate evolving market conditions and deliver sustained returns.