WAM Capital Limited (WAM) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for dialing in to today's call. On the call, you have myself, Lead Portfolio Manager Oscar Oberg. To my right, Tobias Yao, Portfolio Manager and you have Senior Equity Analyst Sam Koch and Shaun Weick, and Equity Analyst and Dealer Cooper Rogers and Will Thompson. So given Tobias and I spoke at Link just over a month ago, we thought we'd change it up a little bit today. Sam and Shaun will give an overview of reporting season and then how we're positioned into 2023. Before the team will then talk about our 4 highest conviction by ideas into 2023. Then following that, we'll have an extended question-and-answer session. We're happy to go as long as you're on the call are needed to go for. And that will be run by our Senior Corporate Affairs Adviser, Camilla Cox. Now before I hand it over to Sam, I'd like you to turn to Slide 3, which is probably is the most important slide in the pack. And essentially, this is a summary of the dividends across the 4 funds that we keep paying on an interim basis compared to the profit reserve, which, in other words, is the profit that we've built up to continue paying these dividends. In our view, if we look at WAM Capital, you'll see that our interim dividend is at [ $0.0775 ] a share, and this compares to the profit that's built up, which is [ $0.147 ] per share. What this means is, is that from that $0.147, we can fund the next dividend, which will be in April of $0.0775 and approximately 90% of the October 2023 dividend. Now as a reminder, we can only add to that $0.147 a shareholder profit. If the market is up and our portfolio is generating profit positive -- profit positive performance. Now in the case of February, the market was down and our performance is there or thereabouts in line with the market. So we haven't been able to add it to our profit reserve in the month of February. So it's very important as investors that you're continuing to monitor the market and monitoring our net tangible asset update released at the middle of every month over the next few months to make sure that we continue -- that the market -- firstly, the market goes up and that our performance is in line with the market so we can keep generating profit that adds to that profit reserve and they can give you more confidence around our dividends from October 2023 onwards. So with that in mind, and I'm sure there'll be a number of quite asked about that like there was back at the end of January when Tobias guided that call. But I will pass it over to Sam, who will talk about our reporting season.

Thanks, Oscar. Reporting season was actually one of the weakest on record with more companies missing expectations that actually beating them. We had our fair share as usual of winners and losers for the period and performance, as Oscar alluded to, was sort of there or thereabouts. We'll provide in greater detail with our monthly NTA [ RPA ] later in February. From a state perspective, the key trends that we identified, we're deteriorating housing. You saw that in [ Domain and REA's ] results recently, not only state follow-through, so consumer witness in the household grews retailing sector with companies like [indiscernible], JB Hi-Fi, Harvey Norman, [indiscernible] posting great results on seeing evidence of great results in the consumer. On the flip side, you're seeing older companies actually place pretty resilient results and resilient outlook statement. Companies like [indiscernible] McLean Chase, [ GEG ] Group and SmartGrid actually outperformed. And then obviously, in a very uncertain environment, the market is looking for confidence in the short term. So companies like Steadfast and AB. AB is an corporate travel that could provide confidence in the short- to medium-term outlook to actually outperform. As results roll through, there was a really interesting consistent trend irrespective of the sector. We're solving upgrades and earnings margin downgrade as inflation continues to reap on the corporate cost bases of Australia. With input cost inflation moderating to a degree, we actually saw that play out. However, while the inflation continues to ramp up. When revenue is actually lessen in the current environment and input cost inflation and cost inflation as a whole is actually given, the market is laser-focused on how healthy corporate Australian balance sheets were. So you still are focusing on cash flow conversion and increases in net debt replenished. We're keeping a really close eye out trading signs that inflationary pressures are easing, which will reduce the output pressure on interest rates and reduce the downward pressure on the economy. So in line with that, I'll pass to Sean just to give us an overview of our position going forward.

Thanks, Sam. Yes. So in terms of our overarching portfolio position looking forward, I mean, we believe that a [indiscernible] interest rate is now within last what I saw, which should provide a more positive backdrop of companies within the small-cap industrial sector to outperform. Hopefully, we don't expect that cost to do any, which has been the case throughout January and February today. A key things that you see for our reporting season was most companies that have seen their share price to perform well leading in, and we're well owned by investors require very strong earnings results in all of the share prices to continue to rally. We've been selectively reducing our exposure to those companies in the months leading into reporting season or aimed to positions that we believe should outperform the market when investors looked at more exposure to small cap which is consistent with what we've seen in previous market cycles. The small industries underperform the index by 22% in calendar year '22 as investors focused on maintaining high liquidity and low risk within that portfolios. And we believe there's quite a lot price in with valuations in small-cap industrials near 10-year lows and looking very compelling to us. We remain confident in our process and optimistic on the outlook for our portfolio companies. Balance sheets are healthy with the majority of our portfolio in that cash position. I mean they hold more cash and property on their balance sheet than debt. In terms of key things within the portfolio, we remain positive on the outlook for companies exposed to tourism and [indiscernible] sectors, such as [indiscernible], advanced hospitality and tourism holdings. The reopening of the Chinese economy should also benefit these companies, along with others such as IDP Education and [indiscernible]. We can also leverage this team from mining services with contractors such as NRW Holdings, Perenti and oil and gas services provider [indiscernible] which we expect to benefit from strength in resources. We've also been selectively building positions in companies exposed to domestic economy, which a bit oversold and outlooks could ultimately improve what we think will be less far. This includes [indiscernible] exposure to the housing sectors such as lifestyle communities, [indiscernible]. I guess it's a broad overarching statement. There is a good balance of value and growth. Exposed stocks within the portfolio. And there's also an underlying focus on energy's resilience. The [indiscernible] evaluation is also widely build positions in companies that were previously screened out as too expensive. We're quite fully names such as ProMedica's REA Group and [indiscernible], which effect the benefit as the patent rights is rich. So I guess in terms of some my conviction ideas within the portfolio at the [ miner ], we thought we all [indiscernible]. So I'll kick things off. So the stock that I'm pitching is volatile. The stock goes QAL. So it's one of Australia's leading alternative real estate investment management. The company's got $5.8 billion in funds under management, has been generating very strong inflows today from global institutional investors, which we believe will continue given the rising appetite for exposure to private credit and the commercial real estate sector, [indiscernible] is the beneficiary of higher interest rates, along with the ongoing retreat of the major banks from this underserved market, which is seeing the opportunities to continue to broaden and it's more than a outpaced committed fund within the business, with unattainted strong backdrop of deployment going forward and such the business is well positioned to upgrade as expectations in the future. We're strategic value actually also earned shares in [ qualitative ] listed investment trust, which the stock code is QRR, which currently trades at a 5% discounts and NTI has been closing more recently and offers investors a very attractive 10% yield. I'll now hand it over to Sam, who will put forward his ideas.

Thanks, Shaun. My next [indiscernible] is an IPD, Australian Electrical wholesaling business where the [indiscernible] over 25%. We think IPD can actually outperform industry growth rates at 5% to 10% ramp through their exclusive partnerships with suppliers through their greater exposure to high-growth areas like data centers, then we see the very customer-centric business model. The cherry on the top is that they've got a small, but growing presence in the electric vehicle [ market ] which we expect quarry wise to actually double and triple over the next 2 to 3 years. This trading on just sort of 14x price to earnings multiple, which [indiscernible] forecast, $21 million of net cash on the balance sheet, we think the catalyst to see the stock right from here is earnings upgrades and further into consolidation. I'll hand over to Will to provide this.

Mines are IGL, which is a carbon [indiscernible] company and carbon [indiscernible] is essentially you've got a landfill, get a landfill from your local counsel and they've removed the gas, which can be -- it's actually methane gas, it's 30x worse to the environment. When they actually make money, they make that gas into energy and supply the local energy market, but they also at, which are Australian carbon credit units. We've seen those carbon credit units going from $30 to EUR 100 in Europe. We've seen them go from $30 to $70 in the U.S., and we've seen some strong price movement this year after the chunk review, which gave the Australian market a bit of guidance at a conference going forward. Great management, great board and it's one we really like in the market. I'll now pass to Oscar Oberg.

As Shaun mentioned earlier, the recovery in tourism industry is a thing that we like to play. Experience go, the ticker is EHP. It's a tourism operator that runs a number of tours and activities across the East Coast of Australia and in New Zealand, for example, the runs bits out of cars for experiences on a [ battery] luxury, life style activities. It's got a treat open venture parts business. But the business that we focus on is the Skydive business and it's returning to strength after COVID decimated its earnings. . So through FY '22, it was really only the week and worry that kept this business afloat. It really missed out on the midweek Skydiving jumps. When we're seeing international arrivals in Australia come back and that will in turn fill out those midwest spots. The fixed cost nature of that Skyline business means that it's currently just like even. It's sitting at about 50% of precedent demand. When that increases because of the fixed cost nature, you'll see a lot of that incremental revenue go up straight through to the bottom line. We'll be looking upgrades in that area for the experience as one [indiscernible]. We will pass out to Camilla for questions.

Thanks, guys. Oscar, we're going to start questions off with you. There's a lot coming through. So the first one is from Stuart and actually a few others who have asked, can you please explain why the WAM Capital share price has dropped recently?

Yes. Sure. Thanks for the questions. So Tobias and Jeff talked about this in the call sort of in January, but just as a recap, Basically, what happened when the war occurred sort of around January and February last year, that was a large event really for the whole market. But what we saw is quite -- is a strong dislocation between those companies that benefited from the war and those companies that didn't benefit from the war. Now unfortunately, the process of Wilson Asset Management over the last 20 years has been that we focused on industrial companies rather than resources companies, which is we're seeing coal, oil, iron ore, really do very well over this period. shareholders might have holdings of BHP, Woodside, CommBank in April done very, very well. So in that period, we underperformed quite extensively in March. And effectively, that's the main reason why we have underperformed last call 12 months. So -- and the reason I'm giving you that context, is because if you have a look at the WAM Capital share price in that March quarter, our cohort of stocks on small caps went down and our portfolio went down, yet the share price didn't move. And at one point in April, it was trading at a 30% premium to its net tangible assets. Now when the selloff really hit harder in the June quarter, we're actually in line with the market. That was okay because everything got sold off. And then the WAM Capital share price caught up. And I think when we got to sort of around June, that premium had shrunk to around 15% -- 15% to 20% premium. Now over that 6-month period, because our portfolio performance was negative, it was down with the market and it meant that was a 6-month period where we weren't generating profit to add to our profit reserves. And we kept paying dividends. So that profit reserve that we showed you in Slide 3, that differential between the dividend -- the interim dividend of $0.0775 and the profit began to close. Now thankfully, over this last financial year, we've been able to generate around 13% to 14% of positive performance. So we've been able to add to that profit reserve, but as I talked about previously, we really only have around 11 months of visibility. And I think so to put that all together, why is the share price fallen? The main reason largely is because of that 11 months visibility, I'm talking to you about the dividend. We have a period where the market falls extensively for the next 6 months. It will put that at the October and the April 2023 dividend at risk. And then secondly, small-cap companies have underperformed large-cap companies. And I think Shaun mentioned that just before, that underperformance is over 20% over the last 12 months. And that's why we're one of the reasons why we've underperformed the broader market. So they are the real factors at play there, and that's probably the reason why we sit today where the share price is. And I still think it's worth noting the share price is still at a premium, but still at a 10% to 15% premium to its net tangible assets. As Geoff has always said, he likes buying things at a discount. The share price is still our premium. So I think it's -- but to finish off, it's very, very important for the listeners to be watching our net tangible asset announcements every month. Watch what the markets doing, then you can make your own decision from there as to whether the stability of those dividends can be maintained.

Thanks Oscar you covered off a few of our questions there. If we begin to focus on WAM research for a minute, this one is from Mark. He said, is WAM Research's current share price premium to NTA, which was 27.5% for January close, a cause of concern. As you mentioned, WAM capital share price decline was due to its large premium to NTA.

So it's not cause for concern. I mean, it's a good problem to have. And I think WAM research has had -- has a very strong profit reserve and ability to pay dividends. So relative to WAM Capital, the issue we do have in WAM research is we are short a little bit of franking. Now that can change quite quickly if we have a positive market, and we generate unrealized gains in the portfolio, but generally, as I'll come back to my last statement, a 27% premium to net tangible assets is extremely high, extremely, extremely high. So at some point, we could see WAM Research at NTA or even a discount. So I think it's just worthwhile just reminding investors of that because, yes, high premiums can easily become discount at some point.

Oscar. You just mentioned the franking balance there for WAM Research. We got a question, is this going to impact the next dividend?

Look, potentially, look, it depends really -- so our ability to pay franking is the unrealized gains that we make in the portfolio and the tax that pay on those unrealized gains and also the franking we received from dividends from the companies that we own. So again, it just depends on the market. If the market is positive into the end of the financial year and the start of the next financial year, then we should be okay. But as it stands today, we've got enough franking for the next dividend, but for the dividend after that, yes, we are a little low, but that can change very quickly. And I think broadly, Camilla, it's worthwhile noting, look, we were saying the same things right now that we were saying in the middle of 2020 with a number of the funds. And we saw a huge uplift in the market from that point in time. So I think it's -- look, it is a tough market. It's a very tough market right now for small-cap companies, but it can change very quickly. So -- and certainly, we're feeling very bullish around our portfolio. So yes, look, I mean, it's worthwhile putting that into context.

Great. Thanks, Oscar. Tobias got a question for you now from Sue. She has asked when do you think a rotation towards small to mid-cap sector will come into full swing?

Thanks, Sue. To put it over to context, Oscar mentioned this earlier, so last year in 2022, small-cap companies under-performed large-cap companies by over 20%. Now that's not new. We've seen this before, and that was around the global financial crisis. That was the perfect setup for a few years of outperformance by small-cap companies versus their larger peers. We believe that we're getting closer to that point. A lot of the data, if you look at a lot of the macro data last year, it's been one direction, now we're seeing a sort of mixed signal. So once the market gets comfort around what peak interest rate looks like, then there will be more risk appetite to come down the spectrum to invest in small-cap companies. And so we do believe we're getting closer to that point versus when we did the core last time around.

Yes. I think as well listed maybe just put some context around it. Yesterday, all of those positive data out on China. So of course, the iron ore companies had a very strong day. So that's BHP, Rio Tinto, [indiscernible]. And that's broadly around 20% of the Australian market. And we don't own a share in any of those companies. And so that -- basically, we underperformed the market yesterday by around 0.8%, 0.9%. This sort of shows you the sort of headwind that we've had. Now at some point, that will reverse and be very, very beneficial for us. And I think, yes, we said this in the last call, from 2010 to 2016 which is a great period for WAM Capital that you can all remember. Small-cap companies outperformed large-cap companies by around 5% a year. The actual reverse of that has happened. It's actually been around negative 3% to 4% since 2016 to date. So we do think we're actually very close to the bottom, and we do think this will rotate in small cuts favor very soon.

Great. Thanks, both. Shaun, we'll go over to you. This one is from Nat who noticed on a previous call that you're positive on the tourism sector. Is that still the case?

Yes. Thanks,. Thanks, Nat, for the question. Yes, absolutely. I mean, our overarching view on the tourism leisure sector is it will continue to benefit from the shift in spend from goods to services as people will get out and about. I mean I think at the moment, China is a great example. That have effectively being bumped up for 3 years, you can see, a nice re-acceleration to turn that in terms by inbound and outbound travel. So as I mentioned before, I mean, companies such as Webjet, Flight Center, [ Bank ] Hospitality, Tourism Holdings, Coopers [indiscernible]. Yes, these are all names that we really like. So we still remain very positive on the tourism travel sector.

Thanks, Shaun. Oscar, this one from Sally, who's wondering if the recent acquisition of Westoz and Ozgrowth contributed to the share price drop at all?

Yes. Thanks, Sally. Look, I would say it probably did. And however, I will say that the shares were too high at that point relative to what was happening in the market. So for those on the call, that can remember, we did the takeover of Euroz, Westoz and was announced to the market, I think, around December 2021. Talk about 3 or 4 months to close. And I think when we got the fund, I think, in sort of mid-April. Now we've had a previous takeover a Mason where basically -- those that were long-term holders of Wilson Asset Management when we took over Mason, we saw some selling, and then the share price quickly rebounded back to where it was. Now what happened with Euroz and Westoz, we had that same dynamic. There was some selling, but then the market came off, and that just exacerbated the selling more. So definitely would have contributed to that. But I still think we'll be in the same spot with the share price anyway. I mean, we're still at a 10% to 15% premium to its net tangible assets. The premium was 30%. It shouldn't have been there, small cap companies have underperformed large cap companies -- so the share price today is probably a fair reflection of what we've seen over the last year. But just as well, just as a reminder, on that transaction, that was very beneficial to our net tangible assets and was accretive. I think it was around 3.3% and actually added $52 million to our net tangible assets. So it was a good deal. It was just in terms of the timing of those that were long-term shareholders of WAM probably wasn't the best.

Oscar. Tobias, next one for you. Are you positioning for any takeover opportunities at the moment?

Yes, sure. So we typically don't invest in companies where a takeover is a catalyst. We -- obviously, our investment process is to buy undervalued growth companies with, I guess, more organic catalysts that could rerate the share price. However, if we look at our portfolio, we think health care is still an interesting space. There's a lot of interest from private equity funds or strategic investors to invest in that space. So a couple of companies have noted an SDA Health and Capital Health. So one is the radiology network. These companies are trading at very cheap valuation or very attractive valuation. There is scale advantage for someone to come and acquire these businesses and benefit from the economies of scale. And so these companies, we believe, are likely to take over targets in the future.

We've got a question for you from Elizabeth. She's asked what are some of the mining services companies that you think are at fair value.

Yes. Thanks for joining us Elizabeth. We have a significant holdings in few mining services stocks. It's [indiscernible] MWH. I suppose that's what I can think off of the top of my head. With all of these companies, we think they're undervalued or they're valued that you mentioned, Elizabeth and with all the tenting to look for margins and those improving margins and earnings over the next half. So yes, yes, they're just ongoing.

I think to add to Cooper's point, I mean, the valuation on these stocks relative to pre-COVID the mine on average of around 20% to 30% lower. And we argue almost across the board, stocks like Perenti and [indiscernible] actual underlying quality of the business improved significantly. So yes, I mean, with the reopening of China and the positive leverage to resources and commodities prices up, also to me and also what we think is a very slight labor market here domestically. We think the balance of power is actually increasingly moved back towards the contractors versus data miners themselves. So just on that as well.

Sam, we'll go back to you that our earnings season again. Alan from [indiscernible] and he saw that Myer posted positive results during the season. What are your thoughts on the retail sector moving forward?

Thanks, Peter. Yes, Myer posted some really strong results. We're incredibly pleased with how that's going. And obviously [indiscernible] there running the business. I mean from our perspective, I think performance from here in the retail sector will be really interesting, it get diverges depending on how -- what sort of the exposure about retailer is and also the people that are actually running the business. I mean it's time to say now, as I mentioned, goods, retailers are doing a little bit tough at the moment. You're seeing companies exposed to parallel area like [indiscernible] retail 2 companies that we plan being strategies the portfolio is still really outperforming. And obviously [indiscernible] reminded me to. So it really comes down to, I guess, operators that are driving this business or potential also comes down to exposure in universal as example, for instance, their core demographic doesn't have a mortgage. And so when you think about interest rate rises that are coming through in the economy, they are obviously exposed there. So they continue to spend. They continue to want to go up the line advance company is seeing our benefit, which again is not a benefit, but make sure as well. So I guess as far as the retail sector is concerned, sort of biggest approach.

Thank you, Sam. Sean, this one is from Dan. China opening up is beneficial for iron ore and coal, but what are our other sectors of the market?

Yes. Thanks, Dan. I mean the G1s that we sort of see providing that reach to that China reacting thing. There is obviously that the tourism and travel sides. We mentioned a few [indiscernible] hospitality and tourism holdings. We like companies like IDP education, which will benefit from the return of Chinese state to Australian shores. I mean historically, [indiscernible] tracking at less than 10. So yes, we think there's really good upside through that thing. And then I guess the final sort of leverage point there were around commodity prices as we mentioned before, and we like the mine services space with that reasons. So we are playing that time and we do like it.

Tobias this one from Rick. He asked do you see any opportunities within the technology sector.

Yes. Thanks, Rick. Yes, 100%, we've invested in a few tech names recently, one that is of pretty high conviction as a company called ProMedica. I think it's 1 of the highest quality tech businesses on the ASX, has over 50% profit margins, and it's growing at 30%, has a very strong [ roots ]. They've never lost customer in the 20 years. They've run the business, it's founder led. We did 2 founders on over 50% of the business. So that's one that we quite like. But overall, we're definitely finding more and more opportunities in the tech space.

This one is from Pedar. I think a few of the analysts can answer this one. Were there any surprises in the earnings season. Maybe, Sam, we'll start with you?

Definitely. Thanks, Gil. Thanks Pedar. I think the biggest surprise like any [indiscernible] way has surprised us, but the biggest surprise to me was a couple of companies that posted less than half this half '23 results the last 6 months. That provided some confidence in the outlook statements that really got the market excited. 2 companies in particular I can think about there is just corporate travel and critical. Again, they have a condition in the next 6 to 12 months within their respective businesses, and I talked about that condition and irrespective of their result, the stuff actually outperformed. So that was the -- that was one surprising thing from my perspective.

Yes. And just to expand on Sam's point overall, a tough reporting season I mean. We saw the most -- the ratio of downgrades to upgrades in the earnings was the highest in 25 years. Putting on the energy environment. But yes, I mean, we found, I guess, on average, the outside surprises were really nice stocks that way to say was under-owner or not well owned by investors. A good example of that would be GEV Holdings. Business Australia on a single digit playing made a large acquisition out of private equity. It's underperformed, I guess, expectations all of all marks of stock own, I guess, initially. But yes, we think that business has turned a cliche the end market, a defensive, and we think the earnings outlook strong, and the balance sheet should progressively years that comes through.

Now I'm receiving the question on surprises is negative surprises. So in terms of negative surprises, we did have our fair share. There's no doubt about it. But I think going into it, we knew it was going to be a very tough reporting season, definitely. There was going to be a lot of companies that guided to a second half weight. So was only really one company where we really reduced our holding significantly, which is nero -- the remainder of the companies that we own, we actually bought quite substantially when the share prices fell. So as Shaun and Sam said, it was a very weak reporting season, but that's normal. What we were expecting that. And pleasing thing there was the Small-Cap Industrials Index actually outperformed the broader market in the month. So that's actually a very good sign that perhaps we are getting closer to the bottom.

This one from Graham. Have you seen a slowdown in IPOs and capital raising? And how do you see IPOs trending in 2023?

Yes. So excluding companies in the mining space, it has been pretty slow. But more recently, we've participated in a couple of capital raisings, flights probably the most notable one recently, and it's done really well for us. We're actually doing the work on the business, try to raise. And any more recently, we've seen a couple of ones in the small cap space, retail food group and matrix composites. So we started to participate in the names. From an IPO perspective, we believe it will continue to be relatively slow. But from a capital raising perspective, we think there are more and more opportunities that will come to the market.

Oscar James has asked for your views on AMP.

Yes, we still like the company. We were a little bit disappointed for the result. We sold a lot into it. So it WAM Strategic, which was a good move, when we saw something about $1.30, $1.35, but don't get me wrong, we still hurt us over that period. It was a very messy result. There's still a lot of one-off items and impairments going through the numbers, and it's difficult to note where certain divisions are. So yes. So it was -- so I'm not -- we're not surprised that it fell and had -- I think it was one of the best performing stocks in the ASX last year. So -- but where it is now, we're now back at a 20% or over 20% discount to net tangible assets. The business is buying back around 25% to 30% of its shares on issue over the next 2 or 3 years. We have a very strong balance sheet. We think the CEO, Alexis George, is doing a very good job. And we do think there's more asset sales to come. So we still like the company, but our holding has been reduced. It's about 1/3 to 1/2 of what it was a few months ago.

Okay. Thanks, Oscar. Shaun, you might be able to answer this one. It's also from James, who asks what part of General Development Group, GDG most attracted to.

Yes. Thanks, James. Management, will be able to answer that one. Businesses brand are run by Graham Hackett, obviously, the air former Australian Olympian. Now we think he is extending high quality very motivated and driven to bring strong outcomes to shareholders. I'd say from an operational level, I mean, the Lonsec business has been absolutely flying, and is proved to be a very good acquisition which was honestly led by management by Grant. And then I guess from here, I mean we continue to see a really strong outlook for Lonsec. And we think market sort of stabilized in some of the retirement, recent retirement policy changes. Yes, that's actually very positive for the investment plans business to. So yes, we think the outlook for GDG looks really good.

Thanks, Shaun. Oscar, this one from Karen, who's asked why isn't the WAM marker dividend higher considering the profit reserve is so high?

Yes. Thanks, Karen. Yes, great question, really. Obviously, it's a Board decision, and we've increased our dividend from $0.05 to $0.0525. And yes, you're right, the profit reserve is really high. It's one of the highest in the 4 funds that we certainly manage. I think it's worth pointing out that in the last -- I think of the 5 years, we've run when Microcat, 4 of those 5 years, we've given special dividends when our performance has been very strong. Clearly, in the last financial year, while we outperformed, we were down quite significantly. So the Board took a prudent approach not to give a special dividend. And the same goes with increase in the dividend. It is a very uncertain market right now. And I guess the last thing we want to do as a house is have a situation that we sort of do with WAM Capital, where if we pay more -- we want to gradually increase your dividends over a longer term. The last thing we want to do is increase your dividend, and then the market falls through an extended period of time. Microcat companies will be worse than the broader market because they're highly risky. And we -- at some point in the future, we might have to pull or reduce your dividend. So I can see that the reason for your question, definitely, but I think it's -- our view is we want to be in this for the long term, and we want to keep increasing those dividends every year.

Tobias, another one from James. What are some characteristics of Wilson Asset Management that differentiates us from our competitors?

It's a great question. Thanks, James. I think, firstly, it's our investment process. So when Geoff founded the business over 25 years ago, that investment process has been tested over various cycles. So this is investing in undervalued growth companies with catalyst that could rerate the share price. . One thing that's pretty unique to us is also our active and research strategies, whether it's how it comes together. We do a lot of meetings, I think like probably 1,000 meetings as a team over the year. And so that sort of forms part of the ability for us to identify opportunities relatively early on the active side and also on the research side. Microcap, these are companies that, in the future, could be larger companies in the ASX 200 index, sometimes the Microcap ideas also flow into WAM Capital, which gives us, I guess, helps us with the idea generation. And then finally, the LIC structure, having this permanent core capital is a huge competitive advantage during periods of uncertainty. We don't have the pressures of money flowing out from capital outflows and we can make longer-term decisions and ensure that we stick to our investment process. I think a good example of probably our process and working at its best, let's call it. And don't get me wrong. There's plenty of times when it doesn't. But just to give you a flavor of why we think this is a competitive advantage. So Mermaid Marine sits in WAM Capital, where microcap has been our best stop over the last 12 months or probably a long way. Mermaid Marine was a small-cap company. I think its market capitalization might have been $500 million to $600 million at the peak of the oil grown back in 2012. That is a very bad acquisition. The business and oil prices fell, capital expenditure fell and oil and gas, demand for their services fell and the business was essentially broke and was hardly alive, let's call it, for about 5 or 6 years. They raised money twice. Now we kept saying Mermaid Marine over the last decade, probably once or twice a year. We knew the management team that had come in to try and fix it. And basically, so around -- it was probably around this time last year, having seen them very regularly, you could sense a change in the management. You could sense that things were getting better. And clearly, oil prices have gone up a lot and the Russia, Ukraine conflict. And there just simply hasn't been any investment in that sector for a long, long time. So we both stopped. And we bought it at around $0.40. So I think shares today about $1.15, $1.20. And we aggressively bought the stock. We went to over 10% of the company. I think it was around May or June of last year across WAM capital, WAM market cap. So that's a big bet in the end, both portfolios, and it's paid off. But we wouldn't have gotten that then. We wouldn't have been able to buy shares in Mermaid, if we hadn't done all those meetings in all those years, where no one was interested in the stock. So for me definitely. I think that's our competitive advantage. We do see a lot of companies. We've got good market feel across the market.

Oscar one's from David. He says, can I assume that the profit reserve represents realized profits and not "book profits" on unrealized investments?

So if -- the vast majority is actually unrealized profits. So it's unrealized profits and realized profits. The problem is if it was just realized profits, we'd have to sell everything to be able to be actually able to generate the profit and then also to pay you a dividend. So without those unrealized gains and prepaying tax effectively over the course of those unrealized gains, we have to sell a huge stack of the portfolio just to keep funding the dividend. So the answer is a big portion of it is unrealized gains. and then a portion of it is also is realized gains. And that's how we generate the ability to pay dividends.

James, again has noticed that in the January 2023 updates engineering was a significant part of the microcap portfolio. Can you speak more about why you're excited about this stock and what potential it has?

Yes, sure, James. Thanks,. Thanks for the questions as well. Shaun touched on some factors earlier on mine services sector and while the issue around it. Austin Engineering is a company that does like track trade volumes and buckets for the mining sector. We're really stock basically had trouble in its Australian division. It's had labor issues and supply issues, but the demand has never waived. Its order book is actually up 40%. They just haven't been able to service that demand. Really, Austin made necessary changes to address that issue. And hopefully, you'll see this improve in the next half and then going to into FY '24 as well. We really think the margins will improve and you'll see this uptick once they start actually addressing that order book. Another reason we're really bullish, again, mentioned management, a singleton runs this company. We followed it for a long time that he was Managing Director of Austin boats before Austin engineering, and we're following for that company and then in Austin we are doing some fantastic job, we'll see an uplift in the shares as you versus the Australian.

And I guess just to expand on that, in, I mean, obviously, we think there's upside, yeah, there surge really around acquisitions, balance sheet in great shape, and we think they can continue to expand our industrial market global undertaking M&A.

Oscar will go to you. This one from Philip. He said, following the Westoz and Ozgrowth takeover, Were there any duplications in the WAM cap investment portfolio?

Thanks, Philip. There were some very minimal duplications. So we had some mining services companies. So the guys just talked about Austin Engineering. We had a waiting in where microcap was doing very well at the time. So we took on Euroz. Euroz had a very large holding in Austin Engineering. I think we ended up with about 7% or 8% of the company. So it's done very well for us. NRW, we didn't own any shares at that point in time, but we're actually looking to buy it at that time point in time, and we inherited the NRW, which is great. And then the only other stock, well, that was it. That was really the crossover. And Philip, you'll probably remember that, that portfolio was largely resources-orientated. And as I said earlier, we focus on industrial company. So basically, anything that's not resources. And so effectively, we did liquidate quite a substantial amount in that portfolio. And the last stock that we did liquidate. I think we did about it when was that just before Christmas, there was a company called OreCorp. So there's really not much of that portfolio. There might be 15% of that portfolio left in our portfolio and WAM capital. So it's probably around -- that's probably about 4% or 5% of WAM Capital as it stands today, but those stocks we're very positive on. So the context of the question is, has it been a headwind? The answers are no.

Thanks, Oscar. Peter has asked you. He says I understand the profit reserve can grow and you make profits on your investments, and you also grow the reserve from franking received from those underlying investments?

That is correct. I think I'd say for the WAM leaders, where if you think about WAM leaders, -- the vast majority of the companies that they own -- that the guys own in WAM leaders pays fully franked dividends. Now for us, WAM Capital does while we have companies that are generating effect of the unrealized gains, which is effectively profit that we get taxed on. A lot of -- and that gives us the ability for us to pay franking. There is -- because we're in small companies or really small companies, a lot of them don't -- might not pay dividends or might not even frank their dividend. So it means that I would say -- the franking is generally lower. The franking that we generate in the period is probably lower than the dividends that we have the ability to pay. So we do have to find it in other ways and which we've done previously when there's -- if you see a potential acquisition like [indiscernible] Euroz acquisitions where we can buy something at a discount, which we see return doing that, but it has the added benefit of franking, we can pass that on to the shareholders.

Chris has asked for your 2 high convection stock picks.

I'll go if you want first. So Mermaid Marine was still very positive on. I think I said that back in January. It has had a good run. We have sold some over the last week because it's gone so well. That doesn't mean we're negative on it, still very positive. I'm reckoning this one is going to double this year. It's called Evolve Education. It's a child care company, very simple. It's quite small. We went substantial around 10% of the company. I think it was back in late 2020. It's been a [ dug ]. It hasn't done well for us at all. It's sitting at $0.50 a share. I think our average price might be $1 a share or so. But it's run by Chris Scott, who is the ex-CEO and founder of GRD Education, which is ASX200 company, over $1 billion market cap. So he knows how to make money, knows the sector very well. They've sold their New Zealand operations, business is net cash. The -- and looking to do acquisitions. So it's a very simple story, very similar to G8 in the early days. Now why we like that and we also like we own G8 in WAM Capital as well. And why do we own like child care right now? There's a number of reasons. Firstly, it's very hard to develop a Child Care Center right now. Building costs are very high and banks are not willing to lend. And secondly and most importantly, you probably have the most favorable conditions around funding that the sector has ever seen, but the labors new policy coming into fruition in July. So we think the demand from child care is going to really increase, and this will still benefit the operators. So we see good environment for acquisitions, good environment for organic growth. This business is trading, I think, on a price-to-earnings multiple, we think, of around sort of 5x to 6x earnings. Once it deploys out money, we think it could easily double over the next 12 months.

Yes. And one for me. This company is reporting in about, I think, 2 weeks' time pressure. No pressure. The company is to as TUA limited TUAs the challenger mobile operator in Singapore run by or founded by the founder of TPG Telecom. It's a founder-led business. We believe they're taking a lot of share from the incumbents as the same blueprint as TPG Telecom back in the days when they won share from Telstra over a decade, we believe they have real and sustainable cost advantages in Singapore, which allows them the -- it gives them the opportunity to price under the market in terms of the value of their plans. As an example, we pay $10 per month mobile plan. It has 100 gigabytes of data attached to it versus their peers can probably only offer up to 15 to 20 gigs of data. We think that's a substantial barrage for them, and we believe they can continue to win market share in Singapore. And over time, roll out other products. So that's something that we really like on a 3- to 5-year time frame.

Great. Thanks, Oscar. This one is from Anthony, who's asked why does Wilson Asset Management not advertise their investment portfolio performance after days.

Thanks, Anthony. I mean, Geoff, we always get this question -- and what Geoff would say is effectively, we want a like-for-like comparison to the benchmark which -- and if you're looking at it, all portfolio managers and if you want to have an ETF, there is a fee involved. So we want a like-for-like comparison. But we do disclose it. So it's on our website. And also, we published it in our annual report twice a year.

Thanks, Oscar. We've got another one from Philip also for you. Considering the macroeconomic factors such as Russian invasion of Ukraine supply chain issues and more. He's asked why a move to a more defensive strategy, including substantial cash holdings was not undertaken for both WAM cap and WAM Microcap?

That's a good question, Philip. Look, if you -- it's a tough one because we did this call -- I think I would have done this call back in -- we did this call, it would have been sort of July. And I think if you reflect on that year, the financial year 2022, what was the mistake. It was probably that we underestimated how much of an impact the Russia-Ukraine war would have effectively on sentiment. And then at the same time, it was more inflation. I think Russian, Ukraine war was a left field event. I don't think anyone knew or think thought it was going to happen. Inflation was there at that point in time. But -- and I think our view is it was cyclical. And clearly, there's a -- it's taking a long time for it to come down. And that was probably something that we underestimated. Now we stayed true the whole time through. We didn't go to cash. We went to cash in COVID. That was the right move. We chose not to go to cash, and there was plenty of times through April, May and June where we caught up and we said, should we go to cash or we cash here. Now looking where the market's gone this year, that was a great move. If we went to cash, went to 40% or 50% cash we have in the past, there is no way we would be, portfolio would have been plus 13%, 14%, pretty close to the all ordinaries index this year. So it probably would have been a 1/4 of that if we go into cash. So look, it's hard on the call. Yes, in hindsight, I would have loved to go into a bit more passion in January and February and deployed it through the May and June weakness. But as we sit here today, I still -- I think it was the right move not to go to cash. And we just got to be prepared for when we want to outperform. We basically, when that tide turns, the large caps start underperforming and small cap start outperforming we want to do very well in that period. And Geoff will always say that it's not about what you lose in the downturn is what you gained in the upturn. And as I said before, when Capital's best years were from 2010 to 2016 and small caps under-performed large cap. So we think that's coming. So we want to be in the market for that.

Yes. I think just to add to what Oscar was saying during that period, we were rotating the portfolio to the high-quality names as well. And I think the equilibrium cash level has probably changed versus say, 10 years ago, where the funds are a lot larger now, we have a lot more larger companies with more liquid companies in the portfolio. So also the makeup of the portfolio is very different now versus back in the days.

And I'd say with that as well, the problem -- we did this in -- at the back end of 2018, like when you go to cash, you're generally selling this device point, you're selling your most liquid companies to get to that cash level, which means that what you're left with are the most illiquid companies like the smaller, really small companies, and that can really capture you if the market starts to turn the other way because the smaller companies don't move, it takes some 6 months to move with the broader market because they're risky. So look, yes, I mean, it's a tough one to call. Look, can we regret it? I'll be -- I think -- personally, I think it was the right move where we sit today, not to go to cash.

Thanks, guys. Well, this is a question from Chris. He says, do you have any strong views on lithium stocks?

Yes, we have a couple of strong views. We think it's a really interesting space and has [indiscernible] last year, he says, it's an immature market. It's very early days, and there's a lot happening. We really like the companies that are generating cash, and we own PLS in WAM capital. We think that's really important. And I think that's last time we called it. We sort of weren't looking at developers as much because of the sort of stretch valuation and we'd rather be exposed to those earning cash flows when there was a bit more risk around where demand was coming sort of this year and next. However, those valuations have come back a bit. So we've been adding positions in the market cap. We have Global Lithium, which is GL1 lithium Power, which is LPI. Just because we think that people get more confidence throughout this year, and you can see that, that demand is stronger. And I think that's the biggest question within the market. We all know how much supply there is and the market [indiscernible] China? And then certainly, last week, just moving around again on the fact that that's been shut down. It's very steady at the moment. However, these development valuations are coming down, I think that there will be a point where you've got the upstream supply that needs to come down and look at these companies, and we'll look at buying as well.

One thing I'd add there is why do we approach caps in the lithium space is exactly the way we approach our, which is always into our process around identifying [indiscernible] on the value side. I was going to go out [indiscernible] that is how we approach our second market.

Cool. Thanks, guys. Sean, will actually stay with you. Ian has asked if you believe that retailer City sheet collective has bottomed?

I'll say like overarching state we're always followers and. And we do him at the smarts a lot at retail than I am. So he's obviously taken a significant stake in the business more recently, which certainly popped out interest. I think in the near term, like the outlook is clearly challenging. I mean are they at the balance sheet risks have fallen for investors, but you know you are up against pretty tough short-term fundamentals on the recession, elevated inventory. But management's focus is really around, I guess, for reducing our balance and prioritizing that over growth, which I think will see them as they get back towards that net cash position. But if you're willing to take a medium-term view on this business. I mean, we think it can get back to 10% to 13% EBITDA margins in normalized environment. So if you're shooting that FY '25, I mean the business on 5x or 6x pay. So it does create really good value, but I do think you just need to take out a longer term beyond this line at the moment.

Thanks, Sean. Sam will go to you. Nick Scali has been a favorite previously. Do you have any exposure at the moment?

No, we don't have any exposure at the moment. It has been favored in the past. Our view is obviously incredibly by management data management business as well with an excellent track record of value creation. Just in the stores and I guess we're a little bit cautious on the [ Nissan ] outlook. Once share price falling in February was the fact that orders in January and the early start of February actually deteriorated significantly versus expectations out there in the market. So we want to see that playing out a little bit further and see how they trade through this period given the deteriorating housing environment. Obviously, we think the acquisition of [indiscernible] was a great move. There's a lot of initiatives there that they can't sell out initiatives that can really drive in earnings growth over the short to medium term. At the same time, they did acquire a business and double down on household goods, probably at the wrong point in the cycle as well. So again, one that we're keeping a very close eye on that, not on the portfolio at the moment.

Thanks, Sam. Well, this is a question from John. What are your thoughts on Hansen ticker HSM?

Yeah. I would like to say Hansen, it's interesting. If you sort of said one of the top management on the ASX, Andrew Hansen. What's one of the safest stocks and the ASX probably answered margins, which have been constant for nearly 10 years. Unfortunately, we want to pay more for a company that's growing -- that's got 3% margins growing at revenues that 4, 5x a year is really so then in a high growth company as opposed to Andrew's very safe company. Their valuation is not high. And I think the key focus for Hansen is making sure that they can get some acquisitions built in and they've made some amazing acquisitions in history. But as we see now in the rising interest rate environment, the multiples, the businesses that they be looking at are coming down. So are ever going to start making some acquisitions probably in the second half like the CFO [ Gilliam ] has just moved on to the U.K. I imagine that to look at acquisitions in that once the market starts seeing signs of it will be buying something, I think that stuff will get to stuff very well.

Thanks, Will. Sean question from Joseph, do you believe Harvey Norman is worth holding over the long-term period?

Yes. Good question, Joe. I suppose to resolve our break. I mean the Australian Bank franchisees are being through issues of COVID. So I guess moving through the second half of '23 and FY '24, we do think sales growth and margins will moderate back towards historical levels in those pre-covid levels, which, in effect, we'll see negative earnings momentum for all in business. I guess the positive though is that the property portfolio, the freehold investment portfolio is worth about [ $275 ] per share. So over the medium term, yes, we do think it looks like good value there. But in the short term, we think a negative earnings probably caps the share price upside.

Thanks, Shaun. Oscar, I'll ask a question on Peda. What is the catalyst to stay invested in Cambridge Capital?

It's probably one for Geoff, I think that one Peda. I think from memory, that was more of an activist position that we took years ago, a long, long time ago. I think we've been in the portfolio before my time at least 8, 9 years, I think. So that's probably more of a question for Geoff. It's just in active KeyBridge.

Thanks, Oscar. We'll go back to the analyst has sorry, we'll go to Sam, does WAM research or where Microcap hold Magellan Financial Group. MFG.

Thanks, Camilla. No, we currently own Magellan is in a portfolio we did WAM research a WAM microcap. It's one we're monitoring closely. Obviously has fallen from grace. Obviously, with a lot of management changes and the fact that they've lost a lot of fund recently. But it's one that we're monitoring. There is value there as you probably seen in press that Geoff has alluded to. Just in terms of that stage, with in various businesses, including one of the unlisted businesses that they hold. So we're monitoring it.

I guess what makes this trying to look pretty interesting too is you effectively got a $1 billion EV. It's got a $250 million of cash and in the area of $400 million [ Baron Jolly ] state. So kind of inside, out. The actual underlying funds management business is trading on 7, 8x PE side. Yes, it's definitely interesting little discount to NTA by the July which has brought up.

Thanks, guys. We'll stay with you. Did anyone have any thoughts on Mars Group and [indiscernible] Holdings?

I can do Mars, let me do Mars Group, and one of the other guys can do [indiscernible]. Just on Mars, Look, it's been a very frustrating holding for us over the last 12 to 18 months. I mean, we always love founder led businesses, but sometimes founders can do things that probably don't sit right with the market. And certainly, Mars is that. Unfortunately, they decide -- Mars Group decided to make acquisitions or too many acquisitions and has continued to do that over the last 12 months and is paying the price for it now. So look, we have reduced our holding in Mars Group. We still own the company. Look, the assets on the balance sheet is worth well north of where the share price currently sits today. It's been impacted by weather. So earnings are artificially depressed. But what we would like to see the company going forward is the focus getting on organic growth, stop acquiring businesses, generate some positive cash flow and reduce debt, which we're hoping that the management is going to do that.

I suppose I'll have overstepping for. It's not one that we look at really, it's the about $40 million. And unfortunately, that doesn't mean within our market catch strategy, and it's too liquid for us to win. But in general, strategy around, I suppose, pressure spend on people's has been an increasing one and especially through COVID, and we haven't seen that trend change outside of COVID. But again, it's not one that we're going to actively own.

Thanks, Oscar. Oscar, a good question from Mindy. Given the drop in the share price, are you saying it's a good time to buy in?

I'll tell you a funny story about that. I told a broker when our result came out on the -- as soon as it came out in the ASX, I was like, can you buy me some shares in WAM Capital. And then I was the next , I didn't hear anything from the broker. And I called the broke up and he forgot I was like, "Jesus, anyway, but I definitely bought the next day. I think most of the team did as well. So yes, because it was one of the first times with same WAM capital. I mean, I've been at WAM Capital. It's my seventh year. We've never traded close to net tangible assets like it did prior to us releasing the results and having that conference call. So generally, I'd say across all the funds, I'm speaking for myself, and I know the other guys are very similar, where our wealth is effectively or the shares that we own the most of, let's call it, are in the funds that are either trading close to net tangible assets or at a discount to net tangible assets. So for me, personally, where microcap got a large holding, but also WAM leaders and WAM global. My largest holdings really personally. So look, is it a good time to buy? Look, we think it's a very good time to be buying small caps. Certainly, we're very bullish on the small cap market, and if we turn out that will be right and WAM capital should do very well. However, just to remember, we're trading still at a 10% to 15% premium to our net tangible assets. It's very high still. So it's just -- yes, the share price has reduced, but it's gone from a 30% premium to net tangible assets to a 10% to 15% premium to net tangible assets. So look, it's still high. And as Geoff will always say, you like to buy $1 of assets at $0.80. So just be mindful of that. But look, just generally, look, we are positive on small-cap companies, and that's why we're fully invested.

Thanks, Oscar. Will, this is a question for Mark. Do you have a current thoughts on [indiscernible] metals?

No, you got. Yes, Jan Roger, we really like Ben CEO and Chief Exploration Officer. I know that rate operators done an amazing job on this asset owner in Brazil. I guess -- and we are testing WAM Capital. One thing that they had to do is get out of the rebate and that's very difficult thing to negotiate because [indiscernible] spoke about their wanting to move into the future-facing metals, which is copper and nickel and the rest of it is really good nickel project. And if they can get out of that, there is a massive valuation outside this company, and we reduced our position a little bit just because we think there is a little bit of miss there. But if they can do it, it's going to be massive. So yes, we still like it.

Thanks, Will. I'll ask this one from Stephen who says, do you think WAM has been adversely impacted because you are losing focus by allocating resources to get acquisitions rather than looking after the investment portfolios?

Thanks, Steven. No, definitely not. So we don't look at the acquisition. So the team that's presenting today, the 6 of us, we don't look at them at all. that's largely Geoff and Marty McCarthy, who is in our operator or was in our operations team at the time that we did those acquisitions and also Jessie Hamilton now Chief Financial Officer. So no, the answer is -- absolutely no. We do zero on that. We're fully focused on that and always have been. And Geoff, speaking to Geoff, that's what exactly what he would say is more about the growth of the business. Obviously, he keeps tuning of what we're doing in the portfolio and everything like that, but the stock picking the same companies, that's all the 6 of us.

Thanks, Oscar. Question -- sorry, to buy question from Phil. It sounds like one from top gun. Have you reviewed Mach7 technologies, which is in the health care sector?

Yes. Thanks, Phil. We've had Mach7 in the MicroCap fund, I think, a while ago, we don't own Mach7 currently. I think one of the lessons we've had over the last period has been, if you had a choice between a higher-quality company with a better technology or better moat and a lower quality company, even though the lower quality company is cheaper, we've I think the better investment has always been with a high-quality company. So Mach7 is not something we've looked out recently. It doesn't have the same earnings margin and recurring nature of that business is not the same as ProMedica, which is something I've talked about earlier. So Mach7 is not something on our radar right now.

Thanks. Oscar, you did touch on this before, but if we can revisit in from Cynthia Ken WAM Capital and WAM research continue to pay their current dividend into the future?

The answer is yes. So to rehash look, WAM research definitely has plenty of tank in the profit reserve. So they're fine, at least for the next 3 or 4 years. You might be able to get me what the sort of dividend coverage is there. But for WAM Capital, we can pay the next dividend in April, that's $0.0775. But we've got $0.147 in the profit reserve. So we got $0.07 of share after we paid the April dividend. So for us to improve on that, $0.07 we need the market to go up we need our performance to go up, that will build the profit reserve. And if that occurs, like it did in 2021, then we will add a whole heat to the profit reserve. And yes, at least for the foreseeable future, we do have coverage of our dividend. So Cindy, it's just very important just to monitor the market. If the market falls 10% free hit from here over the next 4 months and say we've done a good job and where the market has fallen 10 and web down 8%, right? I'll be happy as the portfolio manager as we out perform the market. But you as an investor, won't be happy because we're down 8%, so we're not adding to the profit reserve. So when we get to this call in July of this year and suddenly we're -- we've got $0.07 in the profit reserve, and that's it when we last paid $0.0775 in April, suddenly, there's risk on that October dividend. So you just got to keep monitoring the market, monitor our net tangible asset announcements that come on the ASX every mid-month.

Great. Thanks, Oscar. Question for both yourself and Tobias Yao, is leading your investment process? And is there a price you continue to buying it up?

There's always a price, Camilla. That's sure. So I'm just looking at my phone, yes, they do. So WAM leads actually own their lease. They've got a reasonable position. I think it's in the top 20. The stock has been a perennial underperformer over the years. But there is sort of takeover rumors speculating. There's some activist investors to break it up. Matt and John, obviously, on the call, but I think it's that activism and potentially breaking up the company that they're interested in. We don't currently own it within WAM Capital. Would we own at a later date? Yes, absolutely, if there was a catalyst there and it was looking cheap and we thought the share price would go up 100%, but I don't think we've owned then lease. I don't think, since I've been at WAM for the last 7 years, I don't think we've owned it. So yes, look, everything -- you never rule out a company, but from our perspective, we don't own it at the moment.

Thanks, Oscar. Cooper, a question from Stephen. Is there any appetite to take a position in uranium producers in the near term?

In the near term, good question. We do double in and out of uranium stocks from time as part of the kind of a bucket we'd like to. We believe there's a bit of an energy crisis that's happening in the world. So we do keep an eye on it as an alternative source of energy. Unfortunately, I think there's some government regulations in most of the Western world that pretty -- that's becoming a major fuel source because we really have a long-term view on uranium. We do trade in and out of depending on what your uranium process is doing. And when we do that, we'll play things like producers stuff that's in production to a capitalized on that changing price. In terms of the long-term view, not really sure, it relies on government regulation. But again, energy crisis is the thing that continue to play out and it's something that we consistently look at.

Thanks, Does anyone know across the team have any thoughts on Liontown.

Yes. Yes, Liontown. We talked on the lithium supply earlier today. it's very tough to get these explorers and I suppose to develop is up and actually producing lithium. Liontown came out with the study that surprised the market on its CapEx requirement is much higher than the market was expecting. We see that handling and a few developers as well. We like Liontown as a quality asset, WAM for jurisdictions. So we're happy to have to own. And we just don't think there's many assets like this out there in the world. So there's one that we will continue to look at. We don't own tiny sorry, I could say, but it's one we will look to kind of if gets closer to the production.

I'd say at the moment, a statement for we are focused on assets in production, particularly given the risks around construction cost flow out in game mines. I think it's a high inflation and of the market.

Thanks, Sean. Thanks, Cooper. Tobias, we'll go to you. Do you have any thoughts on Nine Entertainment?

Yes. Thank you. Look, Nine is a great company. However, our concerns around TV has benefited during COVID. And obviously, with people having to stay at home. So the way we're playing media is through Oh! Media, which is an outdoor advertising business. The recovery has been very strong. We believe that we're actually winning share of linear TV. So we think that trend will continue from the TV perspective I guess the BVOD is the exciting area that's offsetting some of the declines in linear TV. So not something we're looking at right now as we are pretty fully invested in the Oh! media.

Thanks, Tavis. That actually brings us the end of the Q&A. Oscar, I'll just pass to you for any closing remarks.

Yes. Look, thanks, everyone, for dialing in. Really appreciate it. I also thank you for your support. Look, if you have got any questions, very happy to have a chat. Obviously, we've got the corporate affairs team, they'll always get back to you. But personally, if you need to call us, we're on the phone call away. So -- but it's a very volatile market right now. It's probably the most volatile we've ever seen it. It's probably the toughest market we've ever experienced. I think it's harder than COVID to be fair. -- to what COVID was. So look, in terms of how we're thinking broadly, does feel like the interest rate rise at least as sort of its mix, but we do think that's coming to an end. And when that does occur, I think that will be very positive, and you'll see it swing back to small-cap companies from large-cap companies. So really appreciate the support, and thanks again for your time today.