WAX wam research

 WAX

https://wilsonassetmanagement.com.au/listed-investment-companies/wam-research/

https://www.asx.com.au/markets/company/WAX

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ASX:WAX is the ticker symbol for WAM Research Limited, a listed investment company (LIC) managed by MAM Pty Limited, part of the Wilson Asset Management Group. [1, 2]

How does this compares with + (VSO).... Australian Small Companies

Overview & Objectives

Focus: Invests in a diversified, actively managed portfolio of undervalued small-to-medium-sized industrial growth companies listed on the Australian Securities Exchange (ASX). [1, 2]
Goals: Aims to deliver a high real rate of return (income and capital growth) while providing a secure stream of fully franked dividends. [1, 2]
Benchmark: Measured against the S&P/ASX All Ordinaries Accumulation Index. [1, 2]
Leadership: Founded in 2002 (listed in August 2003), chaired by Geoff Wilson, and led by CEO Katherine Thorley. [1, 2, 3]

Key Details & Trading Metrics

Market Capitalisation: Approximately AUD $220 million to $230 million.
Share Price: Historically trading around $1.05 AUD.
Dividends: Known for targeting income-focused investors through regular fully franked interim and final dividend distributions. [1, 2, 3, 4, 5, 6]
Not a good share if you want share price growth but if you include franking credits and dividends this has outperformed the ALL ords index.

An investment analyst from Wilson Asset Management discusses portfolio themes and small-to-mid-cap strategies:

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Size Categories on the ASX

Large-Cap ($10 billion+): Major established industry giants and blue-chip stocks (e.g., BHP, Commonwealth Bank, CSL). [1, 2]
Mid-Cap ($2 billion to $10 billion): Medium-sized companies that sit outside the top 50 but within the top 100 or 200 (tracked often by the S&P/ASX MidCap 50). Examples include JB Hi-Fi, NextDC, and TechnologyOne. [1, 2, 3]
Small-Cap ($300 million to $2 billion): Smaller, growing businesses that sit outside the top 100 companies (tracked by the S&P/ASX Small Ordinaries). [1, 2]
Micro-Cap (Under $300 million): Very small or emerging companies, often speculative miners or early-stage tech firms. [1, 2]

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Key Characteristics

Growth Potential: Small and medium companies often have more room to expand their operations than large mega-cap stocks. [1]
Higher Risk: They can be more volatile, face tighter access to capital, and have lower daily trading liquidity (fewer shares traded daily). [1]
Sector Diversity: Unlike the large-cap ASX, which is dominated by major banks and mining firms, small-to-medium brackets include a wider mix of technology, healthcare, specialized retail, and emerging resources

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NTA over the last 10 years

Over the last 10 years, the underlying Net Tangible Assets (NTA) for WAM Research Limited (ASX: WAX) has experienced a structural decline despite delivering decent annualised investment returns. [1, 2]

While Wilson Asset Management's gross investment portfolio performance has historically achieved strong returns before fees, the net value left inside the company (the NTA) has been steadily chipped away to fund high, consistent dividend payments. [1, 2, 3, 4]

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📊 Long-Term NTA Performance & Current Position

Annualised NTA Return: Over a recent 10-year tracking period, WAX achieved an annualised NTA return of approximately 7.68%. This trailed the S&P/ASX 300 Industrials Accumulation Index after factoring in management costs and taxes. [1, 2]
Pre-Tax NTA erosion: Ten years ago (circa 2016), WAX's pre-tax NTA generally hovered above $1.00 to $1.10 per share. By July 31, 2026, the pre-tax NTA has fallen significantly to $0.74 per share. [1, 2]
5-Year Context: This decline is part of a longer structural trend. For instance, in late 2020, the NTA sat at $1.13 per share. The asset base has steadily shrunk during a market macro-cycle where the broader S&P/ASX 200 index climbed substantially. [1]

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⚠️ The Mechanics Behind the NTA Decline

Independent analyst reviews and market data point to a few core reasons why WAX's NTA has steadily eroded over the decade:

The "Income Trap" Payout Ratio: WAX targets a high, predictable stream of dividends (historically 10.0 cents per share annually). When the underlying investment portfolio does not generate enough profit to cover this distribution, the company is forced to draw from its historical profits reserves. This effectively hollows out the capital base and lowers the NTA over time. [1, 2, 3, 4]
Total Expense Ratio (TER) Impact: WAX charges a standard 1.0% per annum management fee. Over 10 years, the compounding effect of management fees, expenses, and taxes creates a noticeable drag between the gross portfolio performance advertised and the actual net asset value remaining for shareholders. [, 2]
Small-to-Mid Cap Headwinds: WAX focuses on undervalued small-to-medium Australian industrial companies. This sector faced severe valuation contractions leading into 2026, culminating in an 18% decline in WAX's investment portfolio for the financial year ending June 30, 2026, dealing a sharp blow to its recent NTA. [1, 3]

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🔍 Share Price Premium vs. NTA

Historically, WAX has been famous for trading at a 10% to 18% premium relative to its actual NTA because retail investors prized the high grossed-up dividend yields. [1, 2]

However, because the underlying asset base has shrunk, the company's franking account has recently been depleted—forcing WAX to shift from fully franked dividends to partially franked dividends (around 55% to 60% franked in 2026). As a result, the market has begun re-rating the stock closer to its underlying NTA, which has caused the share price to correct downwards faster than the portfolio itself. [1, 2, 3]

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