WAM Strategic Value delivered a 9.5% portfolio gain for FY2026, outpacing the ASX All Ordinaries by 3.8%, and declared a fully franked full-year dividend of 6.5 cents per share, up 8.3%. The company maintained a strong cash position and continued to capitalise on discounted asset opportunities.
- Investment portfolio up 9.5%, beating ASX All Ords by 3.8%
- Net profit after tax rose 10.5% to $12.7 million
- Fully franked full-year dividend increased 8.3% to 6.5 cents per share
- Share price trades at 14.1% discount to pre-tax NTA
- Strong cash weighting of 28.8% supports capital deployment
Robust Financial Performance and Dividend Growth
WAM Strategic Value Limited (ASX:WAR) reported a solid financial year ended 30 June 2026, with net profit after tax rising 10.5% to $12.7 million. Revenue from ordinary activities increased 13.7% to $21.07 million, reflecting the strength of the investment portfolio which grew 9.5% over the year. The company declared a fully franked final dividend of 3.25 cents per share, bringing the total fully franked dividend for FY2026 to 6.5 cents per share, an 8.3% increase on the prior year.
The operating profit before tax reached $14.3 million, up 15.1%, underpinned by unrealised gains in the portfolio. However, WAM Strategic Value emphasises investment portfolio performance, net tangible asset (NTA) growth, and total shareholder return (TSR) as more meaningful measures than accounting profits, given the volatility of fair value adjustments.
Investment Portfolio Outperformance and Defensive Positioning
The investment portfolio outperformed the S&P/ASX All Ordinaries Accumulation Index by 3.8%, returning 9.5% compared to the Index’s 5.7%. This outperformance was driven by holdings in listed investment companies (LICs) and trusts (LITs) with global equity exposure, notably benefiting from strong US large-cap technology and semiconductor sectors. The portfolio’s significant cash weighting of 28.8% (up from prior years) reflects a cautious stance, enabling flexibility to seize new discounted asset opportunities as they arise.
During periods of market drawdown, WAM Strategic Value demonstrated resilience, declining only 5.7% when the broader Index fell 10.1%, highlighting its defensive characteristics. The company’s pre-tax NTA stood at $1.25 per share, stable year-on-year, with the ‘look-through’ pre-tax NTA (accounting for underlying portfolio discounts) at $1.43 per share, indicating embedded value should discounts close.
Active Portfolio Management and Capital Recycling
The company continued its strategy of realising gains by selling positions trading near fair value. Notably, it materially reduced its holding in WAM Global Limited (ASX:WGB) after the discount to NTA closed and ceased to be a substantial shareholder in May 2026. New positions were established in Bailador Technology Investments (ASX:BTI), Ophir High Conviction Fund (ASX:OPH), Acorn Capital Investment Fund (ASX:ACQ), and Dexus Convenience Retail REIT (ASX:DXC), all acquired at attractive discounts.
WAM Strategic Value also exited or reduced holdings in NAOS Small Cap Opportunities Company (ASX:NSC) and Australian Unity Office Fund (ASX:AOF) as corporate actions and share price re-ratings closed discounts. The company’s portfolio remains diversified, with 52.4% exposure to global LICs/LITs and 17.0% to domestic LICs/LITs, maintaining a focus on discounted asset opportunities.
Share Price Discount and Capital Management Focus
Despite strong portfolio performance, the company’s shares traded at a 14.1% discount to pre-tax NTA as of 30 June 2026, widening from a low of 6.9% in April. The board and investment manager prioritise closing this gap through continued investment performance, capital management initiatives, and shareholder engagement. The company’s profits reserve provides 3.3 years of dividend coverage, supporting sustainable fully franked dividends.
Management fees were $2.24 million, with a performance fee payable of $4.22 million, reflecting the portfolio’s appreciation above the high-water mark. Directors’ remuneration totalled $80,000, unchanged from prior years, with no executive remuneration paid directly by the company.
Sector Environment and Outlook
The listed investment vehicle sector continued to expand, with total market capitalisation growing 6.4% to $56.4 billion and share price discounts narrowing across many LICs and LITs. Renewed investor engagement and corporate activity such as capital raisings and mergers provided catalysts for discount closures. WAM Strategic Value enters FY2027 with a portfolio trading at attractive discounts, a strong cash position, and a sector environment ripe for further opportunities.
The company remains focused on delivering capital growth, a stream of fully franked dividends, and capital preservation, leveraging Wilson Asset Management’s expertise in identifying and capitalising on discounted asset opportunities.
Bottom Line?
WAM Strategic Value’s solid FY2026 results and active portfolio management set the stage for capitalising on discounted assets, but the persistent share price discount to NTA remains a key challenge.
Questions in the middle?
- Will WAM Strategic Value close its share price discount to pre-tax NTA in the near term?
- How will ongoing corporate activity in the LIC/LIT sector influence WAM Strategic Value’s portfolio opportunities?
- What impact will evolving capital gains tax reforms have on the company’s investment strategy and dividend sustainability?