When the share market gets the wobbles, I’m always on the search for a good bargain. After all, Warren Buffett likes to say that you should ‘be greedy when others are fearful’ – and that’s a guy I like to get investing advice from!
So when the stock market was plummeting last week, I managed to pick up shares in WAM Global Ltd (ASX: WGB).
WAM Global is a listed investment company (LIC) run by Wilson Asset Management. It looks to invest in undervalued growth stocks from around the world. Some of its current holdings include credit card kingpin American Express, toy-maker Hasbro and liquor baron Diageo.
Why WAM Global?
Although WAM global is one of Wilson’s newest LICs, it has already chalked up some solid performance numbers. The portfolio’s value is up an average of 10.2% per annum since its listing in June 2018, and it has recently paid an inaugural dividend of 2 cents per share, which equates to a grossed-up dividend yield of 1.29% on current prices.
Now those numbers might not jump out at you, but Wilson has an impressive track record with its LICs. The flagship offering WAM Capital Ltd (ASX: WAM) was listed in 1999 and has boasted an average return of 16.7% per annum since.
WAM Global is built on WAM Capital’s successful model but brings it to the world stage. That’s a play I’m happy to be a part of.
Management has also indicated its long-term aim to build a growing stream of fully franked dividends for WAM Global shareholders. If you had bought into the float of WAM Capital back in 1999, you would be receiving a grossed-up yield on cost today of 22.14%. That’s what I’m hoping my WGB shares will net me someday.
Is WAM Global in the buy zone?
I noticed the WAM Global share price had fallen from around $2.35 a month ago to around the $2.20 range more recently (at the time of writing , the WAM Global share price is at $2.18), which I personally viewed as an attractive entry point.
According to Wilson’s latest update, WAM Global has a pre-tax net tangible assets (NTA) of $2.45 per share (as of 31 December), which gave me a ~10% discount to the shares’ actual value.
In today’s markets, finding undervalued companies is a tough gig, so the chance to pick up an asset at 10% off was too good to miss.
LICs can give investors this kind of opportunity to pick up shares at a discount to their true value – an opportunity I took advantage of last week. Returns in the stock market can come from unexpected places, so I think it pays for investors to think outside the box in the current market conditions.
The post Why I just bought shares in this ASX dividend growth stock appeared first on Motley Fool Australia.
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Motley Fool contributor Sebastian Bowen owns shares of WAMGLOBAL FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020