WAM Global Limited (WGB) Earnings Call Transcript & Summary

Good morning and welcome to WAM Global's Interim Results Webinar. I'm Catriona Burns and I'm the Lead Portfolio Manager for WAM Global. This is your company and we're pleased, to provide you with an update on the portfolio. With me here in New York is Chairman and CIO, Geoff Wilson; Nick Healy, Portfolio Manager; and Senior Investment Analyst, William Liu. We're excited to give you an update on the portfolio. We're really pleased with the performance in the first 8 months of the year. Excited to report we have 5.6 years dividend coverage in the profit reserve, and equating to an annualized yield on the interim dividend of 5.3% or 7.6% grossed up. In terms of the agenda for the call, I'll begin by giving a update on the portfolio and on markets, and what we're seeing around the world. Hand over to Geoff for some thoughts, and then turn to Nick and Will and the 3 of us will discuss some of the thematics that the portfolio is exposed to, and some of the stocks. In terms of disclaimer up on the screen, what we talk about today, is general in nature and shouldn't be seen as financial advice. So in terms of the portfolio, as I said, we're super pleased, with how the year has started. There's a number of interesting drivers of the market at the moment, including things like artificial intelligence, which we'll go into a bit of detail in this presentation, because it has been a driver of some of the stocks in the portfolio. And in terms of what the team's been up to, I've been travelling around the U.S., Nick's actually been over in San Francisco at one of the major tech companies for the year. Seen a lot of really interesting people, including Elon Musk, Sam Altman, the founder of OpenAI, which created ChatGPT, amongst others, NVIDIA's CFO and various other CEOs and CFOs. So we've got things to update you on there. But yes, the portfolio itself, as I said, performance has been strong, outperforming both the MSCI World and the MSCI Small Mid Index. Very pleased to have that accumulated dividend coverage, and to be paying a very strong dividend yield, particularly when you compare that, to global market dividend yields. So very pleased with that. In terms of what we're seeing around the world, sitting here in the US, the economy itself is very strong, has been remarkably resilient, despite significant increases in interest rates. We've had a high level of fiscal spending, and also significant pandemic savings that, have really buffered the rising -- initially rising inflation and then now rising interest rates. We do look like, we're on pause and potentially cutting through this year, which is really giving businesses confidence, to continue to invest. We do have the election coming up this year in November, but usually in terms of how markets perform in election years, they're up on average 7.5%, particularly post knowing the outcome of the election, when uncertainty is removed. And we do think Biden going through this year, is going to continue to spend, in an effort to be re-elected. If we look further afield around the world, in Europe, the manufacturing sector has certainly been under pressure, but unemployment remains very low, and the services sector is still seeing spend. And we have various holdings in the portfolio that are actually benefiting from that. In Japan, we've got inflation for the first time in decades, and that's feeding through into higher wages, and then higher consumption. And then the weak spot, if you look around the world, is China. You've got a housing market that's been under pressure. You've had widespread deflation, and you got high levels of youth unemployment. So our view on China is that it will take time for these imbalances to clear, particularly if the government doesn't announce more significant stimulus, which they've done things at the margin so far, but not enough to stop some of the issues that, are underway at the moment in that market. In terms of markets themselves, as I said, the market has been very strong, particularly, you know, the market came off into October last year, as interest rates were increasing, but since then has rallied very strongly. What's been interesting in terms of the stocks that are driving the returns, it had -- up until recently it had been quite concentrated in terms of the stocks that were driving returns. So the main drivers, were these major technology companies in the U.S. labelled the Magnificent 7. And at one point this year, they'd driven 70% of returns for the S&P 500 index. What we've seen of late, is that the market returns are starting to broaden out, which is very positive from our perspective, because we tend to hold companies outside, of those names. And we're super pleased that we've actually outperformed, and the stocks we own have done incredibly well, despite being outside those names. And what is driving that is that, when a lot of those companies were going up a lot, initially, sure, some of them have very strong earnings growth, but a lot of them, it was just a valuation, the valuation is getting more expensive. Positively, we focus on fundamentals, on underlying earnings growth, on buying stocks at reasonable valuations. And for us, the stocks that have done really well, are the ones delivering on those multi-year earnings growth that the growth trajectories that were the reason we bought them. And in terms of the portfolio performance itself, we're very pleased that it hasn't been a single stock. It's been very broad based in nature in terms of the stocks that have done well for us. So names such as Tradeweb, Intercontinental Exchange, CME Group, Booz Allen Hamilton, Icon, Quanta Services, and we'll go into detail, more detail on a lot of these names in a little while. But yes, we're pleased it's been broad, it hasn't been a single -- a single stock driving it. So yes, that's probably that's a bit of around the grounds in terms of what we're seeing around the world and in markets of late. Why don't I hand over to you, Geoff, to give any insights, as he got at the moment.

I mean, besides the incredibly cold here, and good morning everyone, but it's evening, it's mid-evening here, and at least it's a little bit warmer today. I've been to New York since pre-COVID, I just forgot how dirty the city is. I mean currently, these are micro, this isn't a macro view, these are micro views. Yes, obviously how expensive it is. I lived in New York back in the late 80s, 86, 87 and early 88. And then it was a pretty tough place to be in terms of high level of crime. You just had to be a little bit careful. Besides walking around the streets and smelling dope on – yes everywhere you walk, because, yes it's legalized over here, now there still is, the level of crime I think has increased quite significantly. I'm just talking to the locals, I know you're a local, but yes other locals besides yourself, yes there is -- they think the risk factor, you just got to be a little bit more careful, if you're over here. From an investment perspective, obviously with yourself seeing some various companies, yes, to me it is like New York is the epicenter of the world in terms of finance. It is incredibly dynamic. Yes, I mean, some of the meetings we had today, the people, they're at the top of their game, they have very defined strategies. And yes to me, the feeling seems quite, yes it still seems pretty positive. That's sort of my big picture take.

Definitely. And I guess in terms of, just to reiterate how we do what we do, in terms of, we are on the ground seeing companies, that process is grounded, in wanting to identify quality businesses that, are in advantaged industry structures, with super high quality management that we think can execute on multi-year growth plans of driving earnings, driving revenue, and really coupling that, with the need for valuations to be extremely reasonable and for us to see strong upside. And then layering over that, the need to have a catalyst to drive a share price free rating. And in terms of what we're doing, every day we're seeing companies, we're talking to management teams, we're talking to their competitors, we're talking to their suppliers. I mean, as I said at the outset, last week I was in Orlando, I saw 35 companies. Nick was in San Francisco, this major tech company, see the cream of the crop in terms of those technology companies, and all their competitors, et cetera, CEOs and CFOs of these businesses. And Will was going through Texas -- meeting the CFO of one of our largest holdings, and various other potential new investment opportunities that, we're looking at. So, we are on the ground, we are nimble when we see opportunities and we think -- that we can identify lots of exciting opportunities in markets at the moment. And particularly, I mean, it's interesting in that artificial intelligence space, and this is a space that we discussed at the last webinar, and we discussed it at the roadshow last time, but it's only getting more and more groundswell in terms of the influence on businesses and how they're adapting, their strategies to what will be the new reality around AI. So with that, why don't I hand over to Nick, who can give us some insights from his time on the ground in San Francisco.

Who and what, Elon? He can tell us what Elon had to say to him.

Yes.

Good morning with Nick is here.

Yes. Absolutely. Thank you, Catriona. I'll do my best, Geoff. It's always hard to summarize his thoughts, because they are quite high level. But yes, thank you. And it is great to be here with you today. As Catriona mentioned, I spent last week in San Francisco meeting companies, and leaders from across the technology space. Now, if there's one clear message that came through from that week and from the last 18 months, since the launch of ChatGPT, it's that generative AI is real, and it's set to change the way a majority of businesses operate. So I guess firstly, what is generative AI? Generative AI is training computer models, to be broadly predictive about the world, which is a departure from previous AI models that were quite constrained. And the opportunity here is truly immense. It's to do full knowledge work what the industrial revolution did for manual labor. So, this is society-wide productivity benefits and some definitely big winners at the company levels. Now, as Catriona mentioned and as Geoff mentioned, last week I did see Elon Musk. But interestingly enough, I think even more impressive than Elon was Sam Altman, who is the Founder and CEO of OpenAI, which is the company that owns ChatGPT that everyone's talking about. He laid out a really impressive vision, for what we could expect over the next 1 to 2 years, but also what we will expect in a decade. And it truly is world-changing. Now, given our belief that AI, is real and meaningful, it's important that we have the fund positioned, to benefit from that view. And the fund is positioned that way. I think what we'll do today is, we'll take you through a number of companies and thematics that illustrate how we're looking to benefit from that theme. But before I dive in, I think it is worth it at this point in time, to just take a moment to reflect on the fact that markets have a strong history of excessively pricing in even impressive situations. Investors at the same time have a strong history of over-extrapolating current earnings. So, as Catriona mentioned, while we're very intent on winning in AI, we're very intent on doing it in a disciplined manner that aligns with the process that Catriona laid out. We also take the view that, if you look for undiscovered opportunities, you can find companies that are set to benefit as much as others. And yet, because they're not so consensus, it's not quite as priced in to the stocks. Okay, so if I kick off with the first thematic, it is digital enterprise. Now, I'll give you a couple of holdings today in this area, but there are many others in the fund that benefit as well. I'm happy to touch on those in Q&A. So, our high conviction view is that digital platforms, need 3 key elements to win. The first is they need scale. In simpler terms, that means they need a lot of current users, using the platform. Secondly, they need to have products and services that, lend themselves to AI. And lastly, they need a better access to data. Now, although this is the last point, I think it's the most important. Our view is that the models that, everybody is talking about today, like ChatGPT, will over time commoditize and become less important. And the most important differentiator between a fantastic AI solution, and a more mediocre one, will be the quality of the underlying data. Now, the first company I want to run you through clearly ticks to those 3 boxes. It is Intuit. They are strong in tax and accounting software. Many of you will know Xero. Xero are strong in Australia and New Zealand. Intuit is very strong in the U.S. I met Intuit last week in San Francisco. It was a really upbeat meeting, but I always ask myself at these meetings, what's my one key takeaway? And from this meeting, it was Intuit's management were really forward-thinking, and actually started investing in AI technology over 5 years ago. That's meant that they're in a position today to be benefiting. They launched an AI assistant recently. They have a really impressive product roadmap that, we think drives the earnings over the coming years, and really acts as a catalyst for the stock. So we're very excited about our holding in Intuit. The second company I want to take you through. So, we talk a lot in the past about how we like companies who help other businesses win. The proverbial seller of picks and shovels, to the miner in a gold rush. We think we have a really good winner in this category, which is Booz Allen Hamilton. I've been covering Booz Allen for almost 10 years. I've met with the CEO and the CFO multiple times. I've visited their headquarters in Virginia. All of that work allowed me to be in a position to take a really high conviction view that -- no other company is better positioned to benefit as the U.S. government adopts technology. This was core to our thesis, when we invested in early 2022. That was when the government was clearly adopting cloud and cyber. It's been working. Booz Allen had a very good year last year, with clear double-digit revenue growth. But actually our view is, that they will be forced to adopt AI solutions, because they are just so compelling. We think again no one is better positioned to help the U.S. government do this. So, we think Booz Allen win for a number of years to come. So, we think that's very exciting. As I mentioned there are others that we hold in the fund that are equally exciting. But why don't I pass over to Will to keep us going with the next thematic.

Sure. Thanks Nick. The other thing that I want to talk to you about today, is that of [electronic biomark biosys] 0.17.49. So, we believe that these are great businesses. We have several businesses in the portfolio that are in its early innings, of leveraging technology to transition away from analog to electronic processes. These are scalable leaders in their fields, enjoy network effects, and importantly they collect valuable data, which will be critical for AI in the future. We've seen this playbook many times across different asset classes, whether it be energy or equities. Each time we've seen success in terms of the long-term compound earnings growth potential, and the attractive shareholder returns on offer. So today, I want to talk to you about 2 companies with 2 opportunities in 2 nascent asset classes. So the first one is Tradeweb. They are electronifying the global bond market. The second one is Intercontinental Exchange. They are electronifying the global mortgage technology industry, and therefore has incredible opportunities for us. So let me begin with Tradeweb. Tradeweb is a leading owner, and operator of electronic marketplaces for the global bond market. That is still in its early innings of moving away from analog to electronic processes. The global bond market is the largest and most diverse securities market in the world. Even larger than the global equities market, which we play in. I started my career over a decade ago, at a fixed income asset manager, and I can tell you that fixed income investors, have been slow to embrace technology, and adopt electronic processes and that is still the case today. If you look at U.S. treasury securities 40% of volumes, are still traded on the phone. That's incredible. At the same time high yield and investment grade securities, have an even higher portion traded over the phone. You compare that to the U.S. equity market where over 90% of volumes are electronically traded. To us it's clear that the market is only moving in one direction. Fixed income volumes, are going to get electronified and you can invest in a company like Tradeweb, which is ahead of the curve. In addition to this long-term compound earnings potential we see a number of shorter-term macroeconomic catalysts, which will assist Tradeweb. Firstly, the inevitable expansion of U.S. government debt, and corporate debt is going to increase, their total addressable market. At the same time, normalizing interest rates, and the relative attractiveness, of the fixed income asset class, means there'll be more flows into the sector. Finally, with the Federal Reserve stepping out of the balance -- stepping out of the market that's, going to drive a tailwind for volumes. So, it's a business that we're incredibly bullish on. The second business, I want to talk to you about today is Intercontinental Exchange. Similar to Tradeweb, they are a leading operator, of financial products across different asset classes. The opportunity I'd like to highlight today is that of the U.S. mortgage industry, the mortgage technology industry in particular, which is still in its nascency. We believe that the U.S. market, similar to the Australian market, every house that gets built in the U.S. gets sold and that's just, because of the strength and the critical undersupply of housing in the US. So while quarter-to-quarter trends can change, we have a strong view that over the long-term the number of mortgages is only going to increase. At the same time -- as this macroeconomic event you have an overlay of going from analog to electronic processes and Intercontinental Exchange is one of the only providers who have an end-to-end solution. They are seamlessly automating and electronifying, the real estate and housing finance life cycle, collecting data, transitioning it through different processes, making it easier for lenders, services and homeowners and we think that's an incredibly attractive opportunity. Why do we think Intercontinental Exchange will succeed? We think they're the largest scalable provider, with the best end-to-end solution. They can leverage AI in the loan origination process and utilize that across their technology stack. Secondly, the management team, has had an excellent track record. They've had disciplined capital allocation, and a proven track record of providing capital returns to shareholders. They pushed hard into the energy market post the fall of Enron. They pushed hard into credit default swaps post the 2008 GFC crisis, and now they're pushing hard into the mortgage technology business post some of the most rapid rises of interest rates that we've seen in recent memory. At the same time mortgage volumes are troughing, and we think that's going to be a tailwind for earnings growth and we're incredibly excited about the opportunity Intercontinental Exchange has ahead of itself. So those are 2 names I'd love to highlight. And with that I'll pass on to Catriona, to talk about critical infrastructure.

Thanks Will and Nick. So the next thing I'd like to chat to you about, is critical infrastructure. So anyone that's spent any time in the U.S., or has been in California through blackouts knows that infrastructure spend in the U.S., has been grossly underbuilt and underspent on. Right now with the geopolitical risks in the world, and various other factors we're seeing huge demands placed on the transmission and distribution systems of the electrical grid in the U.S. The explosion of AI, cloud transitions more generally, energy transition and the addition of renewables into the grid -- and then EVs that are still to come, are all going to put increasing pressure on the infrastructure, both the communications infrastructure, but also the electricity grid across the U.S. This is where a business that we own called Quanta Services comes into the picture. They are the largest systems provider -- in the U.S., so they work with the renewables companies, they work with all the utilities, they work with the tech companies who need to put their data centres onto the grid basically to connect everything into the grid, and then also to maintain the grid. They're a massive beneficiary of all the, spend that is going on at the moment in the U.S. And what is interesting about the U.S. is that, because of all the geopolitical risk and, because of all the pressures on the grid, you are seeing that the government is generally realizing, how behind they are in terms of spend. And you've seen a number of pieces of legislation passed, including the CHIPS Act and the Inflation Reduction Act, which we're going to see significant amounts, of money invested going forward. Last week, as I said, was in Orlando, met with the CEO of Quanta, Duke Austin, been in the business for 40 plus years, says he's never seen an environment as good as this one, setting up for multi-decades of investment and spend. They're the largest at what they do, they're the best. They have an amazing track record of executing. I've known this business for over 15 years, and it's a super high quality management team. And one of the bigger investments in the fund, they've been executing, as I said, extremely well. And we think the earnings growth trajectory, for the business is very exciting going forward.

And run by the Duke?

Run by the Duke.

Good name, good name.

In terms of other investments that are benefiting from this thematic in the portfolio, Applus is a Spanish stock that, we talked about last time. And this was a stock that is involved in testing and inspection and certification of critical infrastructure. And they're the leading player in Spain. When we bought this stock, it was completely unloved, trading on over 16x -- 16% free cash flow yield, less than 7x PE and, but yet a leader in what they did. What we've seen recently is, and what we think is actually going to be a thematic for the market, and will help -- could potentially help a number of the stocks in the portfolio, is that recently it was bid for, not once, but twice, it's had a second bid, and there's a bidding war at the moment underway. The stock's up over 45% since we bought the position. And we think it's just a great example of some of these smaller companies, which are high quality, are starting to see interest from both strategic and PE buyer, like private equity buyers, with rates stabilizing and potentially going down. Particularly if you're a corporate buyer, you want to know your cost of capital. And there's various private equity firms that are cashed up and haven't deployed. So, we think it will be a thematic that, picks up going forward. And we have started to see takeovers happen. And I know Oscar was talking yesterday about the same thematic, for the small mid guys in Australia. So, we think there's a number of holdings in the portfolio that could potentially benefit from this thematic. It's not why we own them, but it's upside if it comes. Yes, so that's 2 stocks, Quanta and Applus. And with that, in terms of concluding on the formal part of the presentation, I guess I just wanna reiterate. As I said at the start, super pleased with the portfolio performance, doing what we do, which is nimble on the ground, comprehensive research, seeing companies, getting to know the management teams, think we've got a very high quality portfolio of stock with multi-decade earnings growth stories, and think excited about the returns that can be generated going forward.

And like the interesting thing is, I mentioned earlier that Catriona and I, I know everyone's been seeing companies and one of the companies we saw today, what I liked is when we sat down with them, and just started the conversation, they said, they start off, they said, well, why would you invest in us? And I thought, oh, that's interesting. Yes, we're doing a webinar tonight. Like, why don't we start, well, I know we didn't start that way, but why is someone investing in today -- WAM Global? And you mentioned, in terms of your investment process, so as to get those undervalued global growth companies, bottom when is the catalyst going to change the valuation. That's, yes, so you're getting expose to that. The beautiful thing is, you're also getting a fully frank yield. I know there's been some questions coming in about profit reserve, we'll talk about that. And the ability to keep paying the dividend, is a function of the profit reserve. So, yes, there's .5 years plus there. And the great thing also is you're getting those assets. You're paying, is it [$0.872] 0.29.07 in the dollar at the moment, the NTA is trading about a 12 and a bit percent discount. And that will change at some point in time. It'll trade at NTA, if not a premium. And I know some questions, have come through on that. So to me, that's sort of a why, isn't it?

Yes, definitely. So why don't we hand over to Emiko to facilitate the Q&A. Thanks, Emiko.

Thanks, Catriona. And thanks so much for the team for your insights, and as well as everyone who's joined the webinar today. So we've received quite a few questions. We'll start with Leon's. He's asked, can you discuss your macro view of the U.S. markets?

Sure.

So, I mean, in terms of the economy itself, we do see it as continuing to be relatively resilient. I mean, at the edges, the jobs market, which has been very, very tight post COVID. So, we had various people let go during COVID and then demand surge back. So we had people moving jobs, and we had a great resignation, because post the COVID boom, and the labor market was extremely tight. We have started to see that loosen up. And but overall, in terms of unemployment, is extremely low, 3.9%. As I said, the consumer continues to be very resilient. There is a number of legislative announcements in terms of, as I said, the IRA and CHIPS Acts, et cetera, which will, a lot of that money hasn't even flowed into the economy. So, we think that will be supportive of the U.S. economy going forward. So that's the economy going itself. In terms of markets, we've seen, a good run in the market over this year since that October low. And some of the valuations, particularly some of the names in the tech space that, have had very good runs, some of those valuations look on the more expensive side. But we think when you go below the surface, there's still lots of value lower down. And so, we are continuing to see lots of opportunities across the U.S. market. At the margin, we have a lot of the stocks that we've had in the U.S. have done very well. So where we are finding incremental ideas, there have been quite a few names that, we've kind of added and increased in Europe, but we still see lots of opportunity in the U.S.

And to me, the interesting thing is, earlier you're talking about the Magnificent 7 and how the markets broadened out.

Yes.

And to me, that's a very positive sign for the market. Not only, I know you mentioned in an election year, the market tends to perform. When the market's hitting new highs, and it's been doing that for 12 months, the market tends to perform, I think, 80% plus of the time. So to me, there's a number of characteristics that make - me a little more positive about this current 12 months, where if you'd asked me sort of 4 or 5 months ago, I wasn't anywhere near as positive as I am now.

Great. Thank you so much both. So we'll turn to John's question. He's asked, why don't you increase returns by reducing dividend reserve?

Yes, well, in terms of increased returns, well, the dividend reserve, the profit reserve allows us to pay dividends. So that's, yes, and that's just an accounting, it's function of accounting in terms of the savers. What is it? How much is it? $0.60 in the…

[$0.667] 0.33.02.

Yes, nearly $0.67 in the profit reserve. That is part of the portfolio. Like it's not as if, say if the NTA general is $0.57, it's not as if 67 odd cents, is held to one side and the yes $1.90 is invested. No, the whole $2.57 of NTA is invested. In terms of, yes, so his question may have been, like if we reduce the dividend, obviously if we pay less out in the way of dividends, then you get more capital gain. And that's really the balance. Yes, we try to work through that in terms of a Board, in terms of making decisions of what dividend we pay out. And I know some of the people who are on the WAM Capital, yes, there was the webinar yesterday, went for a couple of hours, which is some great questions. And with WAM Capital, you've got a situation where the pre-tax return that's being paid out, as fully frank dividends grossed up, is closer to 14% per annum, when the actual capital return has been a lot less than that. So therefore you're losing capital, but you're getting more income. So at the moment, the Board's decided, the dividend at the level it is, is a good type, a good yield. It's that 5 and a bit percent. At the moment it's 40 francs. The ability to franking really is a function of Catriona and her team, yes making profit and then paying tax. Now that's the only way we get franking for the global portfolio. So, there could be times where the dividend isn't frank. So, if you're looking for all those characteristics, then WAM Global is for you. If you're looking for just pure capital growth and no income, then maybe you look for something else, like an ETF, or a different structure. To me, what we need to do, what really will help us in terms of getting the share price to trade at NTA as quickly as possible. Is everyone who's sort of understands what the team is doing, are happy with that and committed, to what we're trying to achieve. And the Board's trying to balance capital growth, and income for shareholders. And we know that a lot of the marginal buyers in Australia are the self-managed super funds. And so if we pay the tax, we may as well pay the dividend out fully franked.

Great. Thank you so much, Geoff. So with Steven's question, he says, WAM Global is a diversified global fund, which pays a strong fully franked dividends with plenty left in the profits reserve. He asks, how do you do it with minimum exposure to the FAANG stocks?

Thanks. So, I mean, good question in terms of how we are. I guess the question more lately has just been these, those FAANG stocks. And now they've added in NVIDIA, et cetera. So it's Mag7. That's just the extension of FAANG, these days. But that group has been driving a significant amount of the returns of the market. What's been positive, is that we've been able to pick stocks that have overall done better, than the index that we measure ourselves against. And it's interesting beyond that, below the Mag7, a lot of the stocks have actually gone backwards. So if you take to the equal weight index, versus the market cap weighted index, yes, it's been very bifurcated in terms of the returns. So sure, we haven't had, we've had a little bit of Google. That's about the only thing we've had, but like, and it's a couple, like 1.5% of the portfolio. Other than that, we haven't had the Mag7, but the stocks we have had have done incredibly well regardless of not being in that group. And as Nick kind of highlighted, part of that was that a number of the stocks have benefit. We had, we chosen them and identified them as unique, market-leading, high quality businesses. And some of them have benefited from the same thematic that, the Mag7 have benefited from, which is AI and cloud. And because they have something unique in their business that they do, they have market-leading data, and they're executing on AI within their business in a more, like in some cases in a much more durable way than some of the equipment players in the, that are benefiting from artificial intelligence. So, we do have a number of technology stocks that are benefiting from AI. They just haven't been in that, the majority in that Mag7 group, or the FAANG group.

So, we've also received a number of questions around WAM Global's share price discount to NTA. Geoff, if you can touch on why the share price is lower than the NTA, and what is being done to close the discounts?

Yes, the reason why the share price is below the NTA, is because obviously some shareholders aren't happy. And in terms of, they're prepared to sell at below what the company is worth. Now, yes it could be changing circumstances. We're not a 100% sure why. And probably if you look back a number of years ago, we did, we made a takeover bid for Templeton Global. We were trading at NTA, a slight premium to NTA, when we made that bid. And we think a number of people, accepted the share alternative, not the cash. And they accepted that. And then over the next period of time, they sold. So normally, when you increase in size and that's what you find, and this tends to happen over time. Yes, the larger LICs, tend to trade it closer to NTA if not premiums. You look at [African Argo] 0.39.37, yes, the WAM Capitals, the WAM leaders. And the plan is to get WAM Global into that similar size. And you tend to find that, a number of the financial planners, they're looking to put, say $5 million to work in an entity. So, they need liquidity. So, there's no use having an illiquid, small listed investment company. And there seems to be some quite significant benefits, of being a larger listed investment company. So I mean, WAM Global -- did get to probably the biggest discount. I think it was 21%, 22% discount NTA. That has narrowed quite significantly over the last little period. And we're pretty comfortable that it'll get to NTA if not a premium again.

Great. Thank you so much, Geoff. Now we'll turn to David's question. Given Chinese stocks are cheap, is it time to buy?

Will, do you want to take that one?

Sure. Yes, you're exactly right, David. Chinese stocks are cheap. You can argue they fit into the undervalued growth category, just given what's happened in that market. I guess for us, we think about it, in the sense that we need to find a catalyst as well. And some of the catalysts that have played out have not been meaningful enough. So one was the reopening of the economy, and moving away from the zero COVID policy. Whilst they reopened their borders, there's been limited consumption expenditure in that region. At the same time, investors are waiting for fiscal stimulus and that's come in drips and drabs. And that -- also hasn't been enough. That's more from a macro perspective where fundamental investors will keep looking at the bottom of the stock stories and how they stack up. And it's a region that we do, do work on and it's a region that we can invest in. We are looking for companies, which can grow. And despite the macro challenges, maybe they can do some self-help, whether it be capital management or improvements in margins. So, we're keeping a close eye on the region. It's definitely like we're keeping an eye on it somewhere that we have interest. But right now we think the catalyst is missing for that region, to go in more meaningfully. So that's how I'd approach it.

Thank you very much, Will. This question is from Steven and it's for Geoff. In light of the presidential candidates being close to 80 years of age, can you see yourself hanging in there as Chair and mentor for another decade?

Well, that wouldn't get me to 80. See, I'd still be young if I was in the Presidential race. Well I'll just say, I'm 66, I'd be 76. Now the plan is to continue on. And yes, so there's no changes there. Warren Buffett, I know Charlie Munger did a little bit better than Warren. Well, who knows, Warren's still going and Charlie's race is finished. So yes, like to me, you got to do what you enjoy doing. And I know everyone that's on this call from our side, from the Wilson Asset Management side, we really enjoy what we're doing. So when you enjoy doing it, then you might as well keep doing it.

Thank you, Geoff. This question is from Mark and Alan. Would the directors of WAM Global, hold a meeting to consider converting the company, to an ETF in light of the long lasting discount that, the shares trade on?

I mean look -- a fair question. And what you've got to remember is this is a listed investment company. It's not a trust structure, not an ETF. There are positives, about ETFs and there's negatives about ETFs. There's positive about listed investment companies, and there's negatives. Now, one of the things that people say, is a negative about a listed investment company, is that it can trade at a discount, but it also can trade at a premium. And to me, I've seen a bit around long enough in the listed investment company space, to see a number of them trade at significant discounts, a number of them trade at significant premiums. We had one, which is WAM Research, which it took us 7 years to get it to trade at NTA. Unfortunately, we did too good a job in terms of tightening up the share register, which is very important, getting everyone committed and understanding what you're doing, and everyone supportive of what you're doing. We're too successful and ended up going to a 50% plus premium NTA. Now, if we had turned it into an ETF when it was trading at a discount, then all those shareholders that sold when it was a 30% premium, 20% premium, 10% premium, 40% premium, they missed that opportunity. And that's one of the beauties of LICs. And probably one of the biggest things that, everyone's missed when they're talking about LICs, it actually is a superior structure to a normal investment company. And Catriona and I were lucky enough to catch up with Bill Ackerman today, one of the US-based hedge fund player, one of the sort of the smartest hedge fund guys in the world. And like it's public knowledge, he's looking at doing a very large listed investment company, or they call them closed-end funds in the U.S. And he just thinks it's a fantastic structure to invest in medium long-term. And I remember the reason why I started creating these structures, back in Australia about 25 odd years ago for us to manage our money in. Now, we could have chosen any pool, any structure, we went for that structure, because all the research I'd seen -- is the closed-end fund outperforms the open-ended fund over time. And that's because you don't get caught up with redemptions, money flowing in and money flowing out. Yes, money tends to flow into the top of the market, and out of the bottom of the market. When you've got a closed-end pool of capital, and he was the investor, as the fund manager, like these guys have, they can invest in these companies and they can take a medium long-term view. And the one Catriona was talking about, now there's just been bid at a premium, and now there's been a second bidder. And like -- yes when an auction starts, the odds are you're going to get a really good result, but you've made good money. And so, you could have that position, you could hold it for as long as you want until something positive happens. So to me, I actually think it's a superior structure. And I think that we could easily, yes, the company could easily change into an ETF. It would give you a little short-term positive, and then you'd miss out on an enormous performance over time. And actually talking about Ackerman, I remember Catriona, Pershing Square, he manages a significant pool of capital, what is it, $7 billion or $8 billion in Pershing Square holdings?

Yes.

$9 billion, yes. And that was, well, a lot of people were looking at him, sort of closing it down or letting people get out of the NTA, or turn it into an ETF or trust structure back 6 years ago. And what is it up? How much is it up in those last…

200%.

200% in that 6 years. So to me, it really doesn't make sense to do that. If we believe that it would never trade at a premium, then maybe, then it's more logical. But yes, it's traded at a premium before global and will trade at a premium again.

Great. Thank you so much, Geoff. So Richard has asked, has WAM Global, or the WAM Global team been in contact with the overseas corporate activist funds, which has taken a significant holding in WAM Global?

Well, that's a very topical question. Yes, we caught up with them today. Yes, and so we caught up with them today. And like what they do, is they look globally, they look around the world and at Saba Capital, they look around the world yes for assets traded at discount. They take a position in those companies and they hedge, they try to reduce the risk. They've actually got a listed investment company, which is listed on the New York Stock Exchange, which trades at about a 9% discount, which actually I've been doing some work on. So keep an eye on this space, but that's not for WAM Global. Yes, so to me -- yes we've had a, yes, we spent a good hour, 1.5 hour with them today. Yes -- chatting through what our plans are and we're very comfortable. Yes, but they will obviously, yes they're looking to get a return. They're looking for that discount to close. Yes, obviously from their perspective, if they're hedging their position, the quicker the discount closes, then the better for them. Yes, so to me, if, yes we have to -- WAM Global has to continue to perform and it has to close, that discount has to close. And if it goes the other way, then they'll end up being, well, I mean, you'd assume, they will end up becoming bigger shareholders, and it would end up being a bigger challenge for the structure going forward.

Thank you, Geoff. We'll turn to, oh, we've received quite a few questions on this one. Has the WAM Global team made any investments in India, and does AI pose a risk in this space?

So in terms of India direct, we don't have at this stage investments directly in India. I've spent over the years a lot of time in India meeting all the listed companies, et cetera. There are some good quality businesses. The good quality often tends to trade on very, very high multiples, and the lower quality spaces tend to trade on the reasonable valuation. So it's a bit of a disconnect in terms of finding, ideas that you would want to, hand on heart, say this is the right valuation, to be paying for the stocks. It is a market we're constantly running screens on. So definitely, certainly in the past, in the future, we could invest directly in the market. I mean, certainly the growth in the population growth, the young population relative to China, which has demographic issues, makes it an interesting place. We do have various companies that are, within the portfolio that are multinational in nature that, are targeting India as a growth avenue. But at this stage, we don't have direct investments in India, and in relation, I'm not sure the AI question, was it meaning is AI a threat to India, or was it they are 2 completely 2 separate questions?

So, I believe it was in relation to, I guess the region within the…?

Well, I mean, yes, I think so. Like in terms of, so India is, in that lower quality bucket of, I mean, India's been a wonderful place to outsource to. So a lot of the BPO, or business process outsourcing companies of the world were all located in India. And when you go and meet companies in India, there's the big players like the Infosys, et cetera, of the world, which are the leaders in outsourcing or basically, you know, labor in India, doing things like call centers, et cetera. And it's been an enormous part of, you know, employer in the Indian population. But, and you see hundreds of these companies, like the barriers to entry are relatively low, particularly where it's just labor, not technology that are being deployed. Or whether you're talking about in India, or the companies in say areas like call centers in developed and more developed markets, AI is definitely a threat to all call center businesses. And you're seeing that in terms of technology, being deployed and the chatbot is being used instead of real people. The thing is, I think a lot of the quality players in that space will evolve and you'll see, the entry level questions when you call a call center, for example, being answered by AI and directing you somewhere. When it comes to more complex applications, right now it's hard for AI to fulfil that need. So, I think AI will improve and these businesses, if you're in that space in the BPO market, you will have to evolve and use technology and become more than just a body shop, which some of these companies are.

Great. Thank you so much, Catriona. Let's turn to George's question regarding the profits reserve. He knows it decreases on payments of a dividend, but if there is a substantial fall in the stock markets, will the profits reserve balance also fall?

No, no. Once the profit is made, from an accounting perspective, it's put into profit reserve, and the Board makes that decision, really to quarantine that to be paid out as a dividend at some point in time in the future. So yes, the profit reserve will go, obviously reduced by the amount of dividend, yes the dividend amount that's paid, but in terms of the market going down, that doesn't reduce the profit reserve. How does the profit reserve grow? It's really the change in the value of the assets. In a 12-month period and it's done on a monthly basis. So yes, we announced the profit reserve monthly, just so you can keep an eye on it. And we've got it over the 12-month period, you've got to hit a high watermark, to put money into the profit reserve again. But yes, so you can just, you can keep an eye on it.

Great. Thank you so much, Geoff. I just wanted to cover off David's question in regards to the percentage of cash in the WAM Global Investment Portfolio. And that's 2.1% as at 29th of February, 2024. Turning to Paul's question, this is a 2 parts question. It is, do you have a view on the U.S. banking industry, particularly in relation to liquidity and confidence issues that seem to arise? And the second part of his question is, are there any broader confidence issues that might impact the markets flowing on from bank industry instability?

Sure, why don't I kick off and maybe Nick, if you want to add anything. So in terms of the banking system in the U.S. in general, it's been extremely highly regulated compared to pre the GFC. So, and it's had enormous consequences actually for the banks. And you've seen, for example, the likes of JPMorgan, Citigroup, et cetera. They all had proprietary trading desks post -- pre the GFC. They've had to reduce risk. They've had to increase capital requirements. And so, the banking industry has really changed since pre the GFC, to avoid the same systemic risks that, we saw occur at that time. Where, as you go down to the smaller banks and what you saw with Silicon Valley Bank, for example, some of this at the smaller end, they don't have the same requirements as the bigger banks that are really crucial to the system. So at the margin, some of the lending practices of those smaller banks, have been more questionable. And so from our perspective, we think those bigger, more important banks that really drive the U.S. banking system and have the majority of assets, et cetera, are well regulated. And there's some of the small ones which won't cause a systemic issue. But you could continue to see blow ups, at the smaller end just, because of some of the lending practices. You have seen with rising interest rates, you see who's swimming naked to put Warren Buffett's analogy. And so, we have seen that play out, with some of those smaller regional banks. So, we don't think there's a big systemic issue. We do think there's issues in certain parts of the market, say in the office sector in the U.S., there's pockets of needing write-downs. But when you look across, I mean -- and various companies we've met today who are in the asset management space are just saying, the demand in terms of real estate for areas like data centers, for warehouses, logistics is all very strong. The pockets of issues are in say office where work from home has changed the dynamic of how much office space companies need, et cetera. So I mean, the broad brush thought is, that there isn't -- we don't see systemic issues in the U.S. banking system. And it's more at the margin that you may continue, to see issues. And sorry, what was the second part, Emiko, of that? I don't know if I covered it.

I can read that again. So, are there any broader confidence issues that might impact the markets flowing on from the bank industry instability?

Again, I think it's -- certainly, if you're exposed to office as a pure manager, then yes, you'll have issues writing down. But in terms of the broader confidence issues, no, we don't think it's going to cause systemic risk, across markets, or the system. It's quite concentrated in terms of the issues. And Nick, I don't know if you want to add anything to that.

Well, I think that was a very comprehensive answer. So, I think maybe the only additional points, I would make is, we did see some issues last year with Silicon Valley Bank. The speed and the aggression, with which the central banks stepped in, really underwrote the assets, really quickly solved any potential kind of systemic issues. It makes us think that the response mechanism, at the central banks is just really rapid these days. That would count in the column Catriona was mentioning that, we don't really see this as something we expect to be systemic. Maybe just one extra point would be, so if you own fantastic businesses, we tend not to be heavily invested in the banks. That's not where we like to play. These fantastic businesses aren't really subject to credit markets being open, or anything like that. We think that perform really well in a number of environments. So, very optimistic on that front, but by and large, really just think Catriona that was a comprehensive response.

And I just add, and that's exactly right, Nick. And one thing in terms of not being, you're right in terms of the investment, and right, like we don't own any of the U.S. banks, would be, we own in financials. When we look at the industries that, we're exposed to, we do have financial services and we are -- cause, we own the exchanges, like Will talked about, Intercontinental Exchange, CME Group, et cetera. And they come up as -- financials, when you do industry breakdowns, but we don't own any of the U.S. banks.

Great. Thank you so much both. So Steven has asked, do you think Xero has any hope competing, against the likes of Intuit, QuickBooks of the U.S.?

Yes, I think I'll take a go at this just since I had a chat about Intuit earlier on. Interestingly enough, Steven, I visited, so I was at the Morgan Stanley Tech Conference last week and both Intuit and Xero were presenting and doing meetings. And I think if I had kind of one takeaway from that, it would be Xero made a relatively decent push to attempt to move into the U.S. market a few years ago. The message that they were sending today is that they're going to be much more focused on profitability of every region, which I kind of read as saying that, not as significant of a push. It's also the case that these businesses tend to be winner take all. Intuit already has significant scale advantages in the U.S. So my base case would be Intuit, is in a very strong position. I think the only thing I'd want to add is, we actually think Xero is a fantastic business. We think Intuit is the way, we want to play this space, but we're certainly very respectful of the quality of the business that Intuit is.

Great. Thank you so much, Nick. Turning to Hon Fai's question and a lovely note from him. Thanks, Catriona and Geoff for your close stewardship of the fund since our last meets. Your opening touches a lot on New York, hence America and upcoming U.S. Presidency election. Do you have any views of the fund's focus on other regions, such as Europe? What is your appetite on Japan?

Thank you for the question. Yes, so in terms of other investments across the fund, I mean, we have about 64% of the fund invested in U.S. stocks. Often they're quite global in nature though. So when you look at the actual earnings, it can be more diversified. We do have about 25% in stocks in Europe and that's very diversified across some great quality businesses. Names like CTS Eventim, which is for anyone who knows, Ticketek and Basel, their concert tickets for Taylor Swift, et cetera, on Ticketek would know that business in Australia. The equivalent business in Europe is called CTS Eventim, a great example of market leader over 90% share in Germany, over 60% share in Italy, Switzerland, Austria, super high quality management team, founder owns over 30% of the business, massively benefiting right now. So that spend, I said, manufacturing sector has been under pressure, but services doing well. Great example of a company where, you've seen enormous artists make all their money these days from touring, and you've seen an enormous amount of artists touring through the U.S. now moving to Europe. So, we think they've had multiple earnings upgrades, which is that identification of catalysts that's part of our process. And we see a really strong trajectory, of growth going forward. We own Hemnet, which is listed in Sweden. It's the REA equivalent. So for anyone who knows REA in Australia, it's the equivalent in Sweden. Unlike in Australia, where you've got domain and REA in Sweden, you've just got Hemnet. They get over 90% of views, when someone's looking for a property. We think there's massive monetization opportunity ahead, when you look at the take like rate that, they charge for their product, versus what's charged by REA in Australia. We can see them earning multiple times their revenue. So huge runway of growth. So yes, absolutely. In Europe, we see lots of great businesses with really exciting, exciting growth. And that's certainly a hunting ground for us for ideas. Japan, again, we own some names in Japan. What they're going through at the moment. So Nick and were there -- did a trip relatively recently. And I mean, what's happening is, as I mentioned at the outset, you are seeing inflation, which is very positive in terms of wage growth and consumption. There's a bit of a dynamic though at the moment that companies, if you haven't seen inflation for decades, they're not accustomed to pushing through price. And so, they've been used to deflation. And so many of the businesses where, sure, they're getting like this some growth, but they're getting margin squeeze. And so, they need to change the psyche in terms, of we have inflation, we need to price for it. And so, we've looked at a number of names, and we had one where the actual business is doing well, but the margins were just getting squeezed, and it hasn't performed for us. What has done well, is a business that we've owned for a long time, Kobe Bussan, which is the discount. They're like the Aldi equivalent in Japan. So, we own that business and they've continued, they've got a lot, big massive store rollout opportunity. You have had a thrifty consumer, because of inflation pressuring some people's budgets, and you hadn't had wage inflation. So you were seeing, and you still are continuing to see, you're seeing them pricing increasing, and the consumer wanting to get more value for money. So that's been a business that has done well, but a lot of the businesses, the market, the stock market itself has done very well, but a lot of the businesses are seeing considerable margin squeeze. So, it is a market we're continuously going back to, and talking to the companies and trying to identify those ones, where we think they have pricing power, because you need to be careful on the margin side in Japan.

Great. Thanks so much, Catriona. We'll turn to Dennis's question. Could you please explain the rationale for retaining so many years of dividend coverage? I know we did touch on the profits reserve earlier, but slightly different question?

Yes, the dividend coverage, is just a function of the performance of the portfolio. So if the portfolio goes up, and in a 12-month period, we're making a profit, then we can put that profit in the profit reserve. Even if it's unrealized profit, we can put it in the profit reserve. And that's a decision that Directors make. So, we're doing it to safeguard our ability, to pay dividends going forward. Now, just to try to explain it to you, you could have a situation where, say a company floats at a dollar, in a 6-month period, it goes to $1.50, you put $0.50 in the profit reserve. In the next 6-month period, the assets go back from $1.50 to $1.00. Then you end up, you still have that $0.50 in the profit reserve, even though that $0.50 wasn't realized. So you got to remember that profit reserve, is realized and unrealized profits, but it allows us to pay dividends to shareholders over time. And that's why the Board makes the decision, and puts it in the profit reserve. So it's really a safeguard. The ability to pay a fully frank dividend, is you also need to have paid the tax, or received fully frank dividends, to pass that franking on. And even though there's a profit reserve, there's not necessarily franking. So it wouldn't be that smart to pay all the profit out. That means you wouldn't be able to. Well, if we paid all the profit reserve out, yes if we paid the profit reserve out now, then you'd get a big dividend. It would only be very, only a very small part of it would be franked. The rest would be unfranked, and it would be sort of illogical for you, to receive it that way. So yes, the profit reserve, you got to see it more as a safeguard for you. It doesn't mean, we've got that much franking. Yes, it just means, we have an ability to pay profits over time. And it's not as if we consciously think, oh, we need a lot of profit reserve. What the Directors and the decisions that we make and yes, the one just more recently where we've decided, to increase the dividend, and pay the dividend out to shareholders, we look at the return on assets. Now you look at the return on assets that we're giving you, and Catriona mentioned it earlier. And the best way to look at it is the pre-tax return on assets. So, we're giving you nearly, is it 7 and a bit percent pre-tax return on assets. Now, if you think assets, go up by about 10% per annum, equity assets increased, by 10% per annum. If you're getting 7% of it, that's pre-tax, or grossed up yield. Obviously taxes paid, and you get a fully franked yield, which if it's in your self-managed super fund, you can claim the tax back. Then in that example, I was giving you say 7%, then you're getting 3% capital growth. Now, if you push the dividend too high, now say if we're paying you a 10% pre-tax yield and we're only making 10% per annum, then you actually get no capital growth. If we're paying you a 12%, or say a 14% pre-tax yield, which is WAM Capital, then you actually lose capital, because your return has to come from somewhere. So it's really that balancing act, to have enough yield and if it's franked, yes, so shareholders can get the franking back, and to have some capital growth as well. Or, and that's what I said a little earlier, if you're just looking at purely a capital growth, yes then look at a company that can provide you that capital growth. Now, what we do is provide a steady stream of fully frank dividends, where we can and performance over time.

Great. Thank you so much, Geoff. John has asked, given many Australian companies are largely international, such as CSL, Rio Tinto, do those Australian stocks get included in the possible pool for WAM Global?

Thanks for the question. Yes, so absolutely, we can invest in those stocks. The only name of note in the portfolio right now of the Aussie names is ResMed. So for anyone who's covered ResMed, and I've covered it for many years in the past as well, the, what has happened to the stock and what we saw as an opportunity is there's been. So these obesity and diabetes drugs, Ozempic, Wegovy, et cetera, have been released in the U.S. by Novo Nordisk and Eli Lilly. And these are phenomenal, success stories in terms of the sales, of these drugs and the benefits that, they're showing right now, in terms of diabetes and weight loss reduction, and so forth. And basically ResMed, anything that was say sleep apnea, which many people who have like ResMed is a, sleep apnea business, they sell the machines and the masks to treat sleep apnea. These products are often used by people, who have more weight and the worry for ResMed was that with these drugs, new drugs being released on the market, that sleep apnea would be solved, and that ResMed would no longer have a business, et cetera. And so, we saw an opportunity, because the stock got very sold off, studies that they've seen and the prescribing doctors, are actually saying increased use of sleep apnea products and a link where you are getting people who weren't previously necessarily treating the sleep apnea. There's a massive undiagnosed population now coming into the system and that's more than offsetting anything that's, going out, because people are getting solved. Their weight loss issues are getting solved. So, we saw an opportunity in ResMed. We actually on the other side of it, own one of the largest packaging companies in the world that's benefiting from the GLP-1. So, it's not that we don't believe in some, of the growth of -- these drugs and the success of them. It's just that we think ResMed's business isn't structurally impaired, because of these drugs. And so, we took a position in that stock. And so that's the major stock that we have in the portfolio that, is an Australian listed stock. But yes, anything CSL, wonderful business, just a matter of deciding on the valuation, et cetera. But yes, there are some great businesses in Australia. We can own them if we want. But at this stage, less than 3% of the portfolio is in Australian stocks. And we have a massive hunting ground around the world, and super high quality businesses, to choose from all around the world.

Great. Thanks so much, Catriona. We have a question from [ Shambhu ] and this touches on the dividend question once more. Based on his observations on WAM Microcap and other funds within the WAM Group, he thinks that a special dividend sometimes helps to close the gap, between the share price and the NTA. Given the profits reserve, and also the current share price discount to NTA, is management considering offering some special dividend for WAM Global?

Yes, I mean, we've looked at, thanks for the question. Yes, obviously we look at capital management at every Board meeting, and buybacks and dividends. They're part of the capital management. We are very low on franking in WAM Global. We had enough franking to frank this fully frank dividend. So, it wouldn't be logical to pay a special dividend that's unfranked. So -- yes that's probably the simple answer to that.

Great. Thanks so much, Geoff. This question, next question is from David. In this net Zero world, do you see an opportunity in nuclear technology and infrastructure?

Yes, so in terms of infrastructure, for sure. I mean, in terms of nuclear, for us, I mean we tend to love these, as Nick referred to it, the picks and shovels businesses that it's like the gold rush analogy, rather than picking whether -- we want to own the gold company, we'd rather own the company that supplies into whatever, whichever gold company is winning sort of thing. And the same analogy can be applied in the energy space, where we're not betting nuclear versus oil versus natural gas. We're playing with this company I mentioned, Quanta Services, just benefits from whichever energy source, is trying to get connected in to the grid. And so, as renewables are getting added into the transmission and distribution grid in the U.S., they're benefiting. We don't have any direct plays on nuclear per se, but it's a great example of benefiting from infrastructure spend more broadly. At plus was that other name that, I mentioned in terms of Spanish inspection and testing for critical infrastructure. And we do think, there's massive infrastructure spend that needs to go on. And it's not just in the U.S. I mean, Europe's the same, you're seeing huge investment. I mean, it's interesting, Europe's been far ahead of the curve in terms of wanting to go green, et cetera. And you're seeing a lot of pushback from a political perspective, just because of governments overspending on things and needing increased pushback for needing returns. So yes, we think infrastructure is going to be a huge area of investment and particularly with geopolitical risk. I mean, as a side note, we're seeing an incredible amount of this trend, of wanting to secure supply chains. And you're seeing a lot of manufacturing move back into the U.S., a lot of, whether its semiconductor companies, et cetera, a lot more infrastructure. People want it close to where the end market is. And every company that you speak to now, for example, with China, where they have a China business, they just say, we're doing China for China. Whatever we can produce in China, we want to sell into that market. We don't want to rely on supply coming out of China, and coming in to the U.S. or coming into Europe. We're trying, to add additional capacity in any other market we can, because we don't know what will happen on the geopolitical side, particularly say with Trump, et cetera.

Great. Thank you so much, Catriona. This question is from Mike. Does Wilson Asset Management have any staff located in New York, or elsewhere in the U.S.?

Good question, yes.

Yes.

So, we're all in New York on this call, except Emiko right now. I'm currently based here, have been since 2021. William Liu, our Senior Investment Analyst, is also based here since last September. Nick's based in Sydney, Geoff's based in Sydney or everywhere.

No, it's Sydney. Yes, Sydney.

Yes.

And we just happen to all be here.

Yes.

It just happens to work that we're all here. We could turn the camera around and it's like it's just -- it's 9:20, a little bit dark outside. And actually not overly cold. Today was a nice day. Yesterday was in centigrade, but I think it felt like 4 point. No, sorry, it was 4.5 degrees, but felt like minus 1.4. But today it's a little warmer.

Great. Thanks so much. So Greg has asked, do you lose any of the tax that you're paying on capital gains in other countries?

So we pay, when we sell stocks, we're doing it, like it's translated back into Aussie dollars. So the tax is paid here. In, sorry, here. Sorry is in Australia.

Yes, we're on the Australian corporate tax rate.

Yes.

So yes, it's an Australian company investing globally, but from Australia. So it pays Australian tax. So there's no other, we don't pay other taxes in other countries.

Great. Thanks so much. And David's question is, we buy WAM Global in Australian dollars, but the assets seem to be in the U.S. mainly. What affects the exchange rates likely to have in the future?

Yes, so. Sorry. No, so what effects are the exchange rates likely to have? So in terms of the portfolio, as you said, like 97% of the portfolio is outside, invested in stocks outside Australia, largely a variety of places, but largely U.S. dollar and Euro denominated, some yen. And so as the Aussie dollar goes down, the value of those, our investments in these other places go up. And so, the portfolio will value, is then translated to calculate, the NTA back into Australian dollars, at whatever exchange rate, is current at the time of the end of the month. And so, the portfolio will continue to move with the Aussie dollar exchange rate, relative to these other currencies.

And you currently, what, we got 62% of the portfolio in the U.S., and then you said, yes, Europe and Japan. But if the Aussie dollar goes up, then the values decline. So you are taking Australian dollar exposure.

Great. Thanks so much. Jeffrey has asked, are the Japanese stocks in the WAM global portfolio, or are they being considered?

Yes, so we do have Japanese stocks. And I mentioned a couple of those before in terms of Kobe Bussan, the discount supermarket player, et cetera. And it is a market that, we do hunt in, and have actually had more stocks in Japan in the portfolio, and have sold some of them. And it's been a market that's done well. The dynamic that, I mentioned earlier, was that you are seeing inflation. So you just got to be careful, which companies you're investing in, and are they benefiting from inflation, or getting squeezed? But there are lots of great companies in Japan. It's just marrying that, process that we have with wanting super high quality management teams, very strong industry positions, and then having visibility on the earnings growth and the ability to find catalysts. It is absolutely a hunting ground in terms of ideas.

Thank you. So Steve has asked, can you please provide the returns for all your funds before and after fees?

Yes, and we do that each 6 months, yes Steven, and we can send you all of them. Now, we actually look at it 3 ways. First of all, we do it before fees. Just so you can look at the index that, we're say operating against, and you can see how the managers performed, or how that pool of capital's performed against that index. Because as you'd know, if you had your money in a unit trust or an ETF, there's no tax paid in those. We're an enlisted investment company. Every 10% we make in terms of profit, we pay 30% tax. So every dollar we make, we pay 30% tax. If we're up 10%, then we pay effectively 3% of that or 30% of that 10% increase in tax. So that's what we do to the pre-tax level, sorry, at the gross level, before fees and before taxes. We also show you on a 6 monthly basis what the assets, the net assets are. That's the assets after tax. So, we're taking that 30% off and we've taken the management fees off. And if we've performed, and yes, if we've outperformed, then there's a performance fee that we split 80-20 with investors. So that's taken off as well. And that's the NTA performance. And then what we also do, is a lot of people say, well, okay, I can't eat the NTA. Because you could have a situation where, the share price is traded at discount to the NTA. Of course, it could trade at a premium to the NTA as well. And so, what we do is we show you what the total share return is. And that's the movement, the share price over a period, and also the adjusting for the dividend paid. We actually don't gross that up, but if you're a self-managed super fund and you get a fully frank dividend, say of 7%. Yes, then you're going to get 3% back from the government. So that's pretty much, we do that. We can send that to you straight after this, or when which we will.

Yes, we can do that. So Jeffrey has asked, are you researching stocks on the Frankfurt exchange, due to the increased population in recent years?

Do we give Nick.

Yes.

He had a chance to -- sorry, we're hogging it.

We're dominating it.

We're in this room. They're in a room over there.

So, yes. If we had anything that we thought would add to the conversation, we would add, but we've just been groaning as much as anyone. Yes, look, absolutely. Jeffrey, I think it was who asked the question. Look, every exchange is within our remit, to go have a look at. We won't purposefully go out, and hold stocks just because they're in a given region, or trading on a given exchange. In the past, we have held Deutsche Borse, which is a conglomerate German marketplace and exchange, which is quite similar to CME and ICE. We just take the view at this point in time, even though that is a good business, we take the view at this point in time that, the opportunities that we'll actually laid out in Intercontinental Exchange, which I show on to ICE, are fantastic. The mortgage opportunity is huge. And we think CME, as a company just offers this fantastic ability, to perform really well in uncertain environments. We think there is uncertainty around interest rates, around the future path of energy. There's an election this year in the U.S. So, we think CME is really positioned well as well. Long answer to the question. Absolutely, we look at the Frankfurt Stock Exchange, and we will hold stocks there, where they meet our process.

And I'll just give Will the chance to, I mean, SAP has been one of Will's calls, and it's listed in Germany, and it's been an absolute cracker for the fund. So why don't you give some context for SAP, Will?

Yes, sure. Thanks, Catriona. So SAP is one of the bigger positions in the fund. We owned it quite early on, and we took quite a differentiated view from the market in terms of, we thought they would be successful transitioning their business model away from licensed revenues to recurring cloud-based revenues. And they're largely been successful with that. And so, now they're reaping the rewards of having done the investment 2 to 3 years prior, similar to what Nick mentioned with Intuit and AI. So, they've got a great management team now. It is the European tech leader. Like we are finding some tech names in Europe. And I think, it's going to be really important for AI as well. They're so, embedded in the top Fortune 2000 companies, embedded in their business processes, have unique data insights. They're now in the cloud. They can use those -- that data to provide differentiated insights, to their customers and increase their value proposition. So, we think the multi-year story for SAP is very strong, and we expect double-digit operating profit growth in the near to medium-term.

Great. Thanks so much, Will. Jeffrey has asked, are you considering a new WAM listed stock for the new future?

A new WAM listed fund?

Yes, that's right.

Yes, not at the moment, but we've got like there's 4 or .5 that we'd like to do at some point in time. But now there's nothing short-term. Thanks, Emiko.

Thank you so much, Geoff. Michael has asked, have you looked at Novo Nordisk?

We have. Yes, we've looked at Novo and Eli Lilly, which are those 2 GLP-1 companies that I was mentioning before that have these new drugs, Ozempic, Wegovy et cetera, and have been shooting the lights out in terms of this. It's a new space, and -- there's been a number of trials underway showing that if you use these drugs, the risk of cardiovascular disease decreases, et cetera. Right now we're playing them, we've bought a German listed company, again, a picks and shovel business. So, they do the packaging, they produce the syringes that actually, that you use to inject the drugs into your body. And so it's, again, it's the packaging. It doesn't make, they don't care whether it's Novo's product, or Eli Lilly's product that wins. They're the leader in what they do in Europe. And we think -- it's been, it's a very, in terms of the valuation, it's very compelling. We've seen, there's an example of this type of business called West Pharmaceutical in the U.S., and the playbook that Gerresheimer in Germany, are using is very much the West playbook, which has seen enormous growth over multi-years. You basically, with these products, it's not just a can, or some supermarket product packaging. You get put into the FDA approval, as the delivery system for these drugs. So, once you're approved, you can't get, it's very hard to change out these suppliers. So, these drugs have multi-year growth trajectories. And once you're in that approvals process, the visibility around growth is very strong. And we think we don't, there's a number, whether it's Eli or Novo's product, or the various other competitors that, are trying to come into the market and play in that space. We think these guys are really well set up, to benefit whoever wins in the space.

Great. Thanks so much. Now, this question is from Graham and it's for Geoff. Do you have a view on the franking outlook?

So that's the franking outlook for WAM Global, I assume?

Yes.

Yes the, well, in terms of to pay the fully frank dividend, then WAM Global needs to make profit and pay tax. Yes, so it really is a function. If the portfolio makes money in the next 12 months, then we'll pay tax. And the dividends will be fully franked. I just, I can't be any more certain than that. I mean, as I mentioned earlier, for the, and I think Catriona mentioned, for the latter part of this year. Yes, we expect the U.S. market, to continue to perform. And if the U.S. market is performing, then global markets tend to perform. So, therefore you'd assume, if that's the case, then the portfolio would make money, pay tax. And so, then the next dividend would be able to be fully franked.

I think we've accumulated enough for the next dividend. We can say, yes.

Yes. There is another frank.

Yes. For one minute, and then we've got to continue to pay tax from, yes from here.

Great. Thanks so much. Now, this question is from Mike. He just wanted to confirm that all WAM Global international investments are unhedged to the Australian dollar?

Correct.

Great. Thank you. So this question is from Samantha and it's for Geoff. I've noticed you are buying WAM Global and Future Generation. Can I ask why?

Well, I was just looking at what's had the, was on the biggest, the biggest discounts. Yes, and WAM Global, well, when I started buying it, it was at a lot bigger discount. It's at less of a discount now. Last couple of days, just before this, I stopped buying. Both, yes, Future Gen Global was, yes, it was trading at a big discount. It's on less of a discount, but still is quite a large discount. And, yes, sorry, Future Gen Global was at the discount. And then Future Gen Australia was at a really big discount as well. And but both the 2 Future Gen buying, that's the Wilson Foundation, is buying them. It's just got a bit of cash at the moment. And they buy that. So to me, I try to buy assets at a discount if I can. And then, you're getting more bang for your buck.

Great. Thanks. So there's been quite a few questions on the healthcare space. Why is healthcare the largest segment of your portfolio?

Well, that Nick.

Yes, I'm happy to take that, Catriona. Feel free to add anything at the end. Yes, so healthcare is an area we're very well invested into. It's a space we like, I think, probably for the primary reason that, if you think of the needs of the healthcare patients, they don't come and go with the economic cycle. They're ever present. And healthcare stocks have this great ability to grow earnings kind of regardless of the backdrop that we're seeing. So, we really like that perspective, to healthcare stocks. More specifically, so we hold quite a few names that are in healthcare. The likes of Icon, Avantor, Gerresheimer that Catriona talked about, Thermo Fisher Scientific, HCA, the hospitals company. Quite a few of these companies, we think are set to benefit quite well, from the recovery from a dynamic that we've been going through over the last 2 years. As we came out of COVID, it turned out that quite a few healthcare companies. Or developers of treatment options overstocked in their consumables simply, because supply chains were so impacted at the time. That overstocking resulted in a situation where the companies that provide consumables like Avantor or Thermo Fisher, saw their demand decrease, but it really was just a timing effect. The long-term reasons that this is a very interesting space remain in place. We've talked about them in the past, but the demographics are really a big tailwind here. And there are these fantastic technological breakthroughs in the space that, we think are just, kind of multi-year. If not multi-decade tailwinds to these stocks. So, we are really upbeat and optimistic on the likes of Avantor, Icon, Edwards, Thermo Fisher. We think these are fantastic businesses. So we're quite purposefully invested into the healthcare space. Catriona, anything you would like to add?

No, I probably, I mean, it's been fascinating in terms of post-COVID. There was just, there's been an enormous wall of money into drug development, into cell and gene therapy, into vaccines, et cetera. And it's been really -- interesting in terms of then, you couple that with AI and it's just speeding up, the pace of innovation in the space. And that's really benefiting a lot of the holdings that we have like Icon, which is really at that front end. The pharma companies have increasingly outsourced those clinical trials. And when you're seeing all this drug development, they've been a key beneficiary. So, and then it goes down the chain in terms of the Avantor's and the Thermo's. And we think, so we do think that is a multi-year avenue like growth. And then as Nick said, like layering on demographics and yes, we just think there's a lot of positive tailwinds in the healthcare space. We don't, it's not, we don't play biotechs themselves trying to pick, they're going to win on ex-clinical trial. And if they don't, the stock will be worth nothing. That's not how we do it. It's more picking companies that win regardless of which therapy wins. So yes, we're excited about the names we have in the portfolio in the healthcare space.

Great. Thanks so much, Nick and Catriona. This question is from John. He says, one of the issues in holding direct U.S. stocks by an Australian family trust or SMSF is the painful paper process required by U.S. facilities. A plus for WAM Global is that this is not needed. He asks, what are the chances for reduction in their system complexity? I don't know if you can answer this one, but.

Well, I guess, we're not in the U.S. administration or the tax administration. My experience is, it is very paper intensive. I know my daughter lives here. She's just sent something in, some tax she had to put it, 4 different documents and it is sent in separately. It's paper warfare, I think.

Yes. And it's very, it is a very complex. As someone who's unfortunately had to do U.S. tax returns the last few years, it is an incredibly painful process. So I'm sure from, yes, as you buying shares, et cetera, it is, and you have to do federal tax, state tax. You have to say how many days you've been in different states around the U.S. And if you've been too many states, you do a third tax return. And I mean, the benefit to the portfolio is we own Intuit, which is the biggest tax software provider in the U.S. So we're benefiting from it, but in terms of having any faith that the system complexity will reduce significantly in the paper requirements, it's, I don't, I wouldn't be betting on it. And even with the banking system, I mean, it's fascinating. You go, whether it's China or Australia, you come here, and even things like tap and pay, we're very slow to get going, obviously now put into the banking system, but, and the amount of, we look at a lot of the tech companies in the banking that sell into the banks, and it's amazing how many aren't on, how many haven't done technology updates and so forth. So, and as Will pointed out, in the case of say intercontinental exchange, they're trying to go from paper systems in the mortgage system and electronify it. So, we've got lots of plays on trying to get it there, but yes, I wouldn't hold a lot of faith in it near term reducing too much paper and complexity.

Thanks so much, Catriona. Turning to Barry's question, with the projected drop in worldwide interest rates, what are you looking at rate sensitive stocks? Oh, sorry, are you looking at rate sensitive stocks like REITs?

Yes, Nick, do you want to, I mean, I'm happy to, but Nick won't go for it.

Happy to, I think my view would be, yes, interest rates are set to drop across the world from the levels that they're currently at. There's a lot of debates in the market about when this will occur. I think of late, it's been pushing out just, because of how strong the economies have been. If I think of REIT stocks themselves, we honestly, we see such an abundance of opportunities to invest into, and we really like high quality businesses. I hope that came through in kind of the messages and the stories we were giving you today. We like businesses that can be winner take all that have network effects or great industry structures. I think REITs offer a potential opportunity to invest, but they're generally going to be a lower quality space than the places we generally like to invest into. But we're certainly open to any sector, industry, geography. If there's opportunities, we will take a look.

Yes, and why often they don't fit necessarily, like is that growth trajectory? So, they have to tick all the boxes in terms of the process. So, but yes, as Nick said, we'll look at it. We'll look at everything.

Great. Thanks so much. Jeffrey has asked, could you talk about the few ASX stocks in WAM Global at present?

Yes, so the one, the stock we really own is ResMed at the moment. We've owned it, we've been in and out of different things in Australia over the years, but right now ResMed's the one we own. Just being oversold.

That's the only one.

Yes, oversold on the GLP-1 fears that we think are overdone. And we think the long-term, there's still a massive pool of patients that have sleep apnea that still need to be solved. And yes, we just saw an opportunity, but yes, most of the rest of the portfolio is outside Australia.

Great. Thanks so much. And this is the last question for today, and it's from Jeffrey again. Are share buybacks a consideration for your companies with excess profits going forwards?

Yes, whether there's profit or not, like that's not really a decision, influence as a share buyback. The logic of the share buyback is if the NTA, is trading at a discount, then you buy back ex amount of, say if it's trading at a 10% discount, you buy back 10% of the capital and it increased the NTA by 1% and it costs you nothing. What it also does do, it reduces the liquidity of the company. It actually benefits the sellers, it gives them liquidity. And it is slightly positive for NTA. What I've experienced is, and it was interesting, I said I was over here talking to some other players in the market. And the conclusion is that share buybacks don't solve the problem of the discount to NTA. What a lot of investors see is when a share buyback happens, they think. Well, the fund manager -- I prefer him to invest in a company and it goes up like the one that was taken over. Now it goes up by 40%, not by making 10% or 15%. Or if we did a buyback at the moment, you'd be making $0.125 on $0.875. Yes, so you'd be making about 14.5%. So to me, it's trying to, people see, a number of investors see that as a negative. When you're doing buybacks, you're shrinking the size of the company, reducing liquidity of the company. And wouldn't you be better off looking for an investment that you can make a multiple on your money. And so the interesting thing is, they tend not to work. And we've done a lot of research on them, but in an Australian context, and most of the LICs are doing buybacks. It doesn't improve their performance at all. As an option, the Board talks about it, we look at it. And then like with WAM Research, we bought back 35% of the company. Now go back a number of years ago.

Great, thank you so much. That is the end of all the questions. I'll just pass it back to Catriona for any closing remarks.

Great, thank you, Emiko. And thank you for facilitating the Q&A. And big thank you to Geoff for being with us today, and to Nick and Will. But most of all, thank you to our shareholders, as we said, this is your company. We're pleased to report and update you on the portfolio, answer your questions. Thank you for your support. And as I said, we're really excited about the portfolio and look forward to updating you again soon.