Stockpicker rivalry coming to a head

The rivalry between fund managers Geoff Wilson and Paul Moore comes to a head on Monday, over a proposed scheme merger between two PM Capital funds.

Fund manager Geoff Wilson, above, at Double Bay in Sydney's east. Picture: John Feder / The Australian

The rivalry between fund managers Geoff Wilson and Paul Moore comes to a head on Monday, when shareholders in PM Capital Asian Opportunities Fund (PAF) vote on a proposed merger by scheme of arrangement with PM Capital Global Opportunities Fund.

Mr Wilson’s flagship listed investment company WAM Capital has launched a competing offer, but the PAF board and its independent expert have recommended the PGF proposal, saying its implied, “look through” value is superior.

Mr Moore, who is not a director of either PAF or PGF but is a substantial shareholder in both LICs, urged investors in the target company to vote in favour of the scheme.

“There’s really only one issue that they should consider, which is they’ll end up with a $1.14 pre-tax NTA (net tangible asset backing) under the scheme compared to 95c under the WAM offer,” he said.

“The main objective of an investor is to (grow) capital – the PGF offer is accretive but the WAM bid is significantly dilutive.”

Mr Moore also entered the fray about Mr Wilson’s comment in 2019 that he would tell his daughter not to buy shares in WAM as they were trading at a premium to their NTA.

Mr Wilson, who said at the time it was better to buy shares in LICs when they were trading at a discount, told The Australian last month that he had been quoted out of context.

“I’m happy to buy at a premium if I believe the outperformance will be good over time,” he said.

Mr Moore asked what possible alternative context Mr Wilson had in mind.

“The question he should answer is: ‘Why should anyone pay a premium for assets that they can buy themselves on an exchange?’ ” he said.

He pointed, as well, to commentary by PGF chairman Chris Knoblanche in a letter to PAF shareholders last Wednesday, which said WAM Capital had underperformed over the past five years to October 2021.

“WAM only publishes gross returns,” Mr Knoblanche wrote.

“Once all fees and expenses are considered, WAM’s performance is materially worse than it says it is.”

A proposed scheme requires 75 per cent of votes cast in favour and at least half of all shareholders to register a vote.

WAM Capital has acquired 13.8 per cent of PAF under its unconditional takeover bid.

The company has said it will vote against the scheme at Monday’s shareholder meeting.

Mr Moore said it would be a “travesty” if a single entity like WAM Capital were able to prevail over the clear will of the majority of PAF shareholders, who had demonstrated their wishes by failing to accept the alternative takeover offer.

He also called for consistency and transparency in the LIC sector, saying funds should report on their net returns after fees and expenses instead of gross returns.

“It definitely needs clarification – I don’t think both can be right,” he said.

“Everyone in the industry knows that it’s what goes into the pockets of investors, after fees and expenses, that counts.

“The industry best practice is pretty clear.”

Mr Wilson, who could not be reached for comment, scored a victory in the Takeovers Panel earlier this week when the panel ruled that PGF had failed to promptly implement appropriate governance controls given the close links between the bidder and the target.

The stockpicker welcomed the panel’s decision, saying it was a partial victory for all PAF’s retail investors.

“The (panel) has confirmed that the boards of PAF and PGF didn’t implement governance protocols appropriate for such closely related entities,” he said.

“The board’s performance is extremely disappointing, and the Paul Moore group’s acquisitions of PAF shares have broken the law, as detailed by the Takeovers Panel.”