LICs on notice in Geoff Wilson’s WAR

Ready for WAR: High-profile fund manager Geoff Wilson. Picture: John Feder

When hyperactive fund manager Geoff Wilson chooses the ticker code WAR for his new strategic opportunities fund you know he means business, and it should send a shiver down the spine of company boards that fall onto his radar.

The modus operandi for the $225 million WAM Strategic Value fund, which plans to list next month, is unlikely to see Mr Wilson and his crew sit down for endless cups of tea and sandwiches at the Club or Qantas Chairman’s Lounge, but rather adopt a more combative approach that is in keeping with the “WAR” label.

And the most likely listed investment company to first feel the early clutches of an arm twist is the $295 million Templeton Global Growth Fund. In this case Wilson’s asset management business begins with having already stormed the beaches and set up camp as various WAM entities already hold a 14.7 per cent stake in Templeton Global Growth.

There are a dozen other LICs on the WAM Strategic Value radar that have been accumulated over years by WAM entities, including the sleepy Australian United Investments fund, an emblem of blue-blood Melbourne business founded in 1953 by the late Sir Ian Potter with The Ian Potter Foundation its largest shareholder.

Meanwhile, shares in Templeton Global have flatlined for more than a decade and, while it has been listed on the ASX since 1987 and is part of the giant US investment group Franklin Templeton Investments (global funds under management: $1.9 trillion), it has been greeted with a collective “meh” from Australian investors.

Now it has topped the list for Wilson Strategic Value in terms of its biggest positions leading up to the float of the fund, with WAM entities holding about $42.6 million worth of Templeton Global Growth shares. Dangerously for Templeton, despite all its hard work in recent years to close the gap between its share price and net tangible asset backing, it has had limited success.

The share price discount is now at just under 9 per cent and, while it isn’t the largest value gap on WAM Strategic Value’s watchlist (that medal goes to NAOS Small Cap Opportunities at 21.4 per cent; expect a knock on the door soon from Wilson), it is the collective WAM funds’ biggest holding.

The Wilson funds began buying up shares in Templeton Global Growth in July 2015, taking advantage of a shortfall in a placement that had the added bonus of being sold at an 18.3 per cent discount to the underlying NTA. A key lesson in life, politics and business is never bare your neck to a wolf, and once Wilson had picked up the scent it kept on buying to go above 10 per cent of Templeton Global Growth’s issued capital in late 2018 and has accelerate its purchases.