WMA - WAM Alternative Assets

[System]

The Blue Sky Alternatives Access Fund Limited (BAF) will be a listed investment company mandated to invest in a diversified portfolio of alternative assets managed by a wholly owned subsidiary of Blue Sky Alternative Investments Limited.

The Fund's objective is to achieve pre-tax returns (net of fees) on the Investment Portfolio in the long-term that are higher than the Hurdle Rate (which is a fixed rate of 8.0% per annum), through long-term capital growth and dividends by investing in a portfolio of Alternatives. The Investment Portfolio will be a portfolio of funds and investments managed by Blue Sky Entities.

The Company will provide investors with the opportunity to access an actively managed portfolio and gain exposure to the investment experience, expertise and track record of Blue Sky Entities.

http://blueskyfunds.com.au

It is anticipated that The Blue Sky Alternatives Access Fund Limited (BAF) will list on the ASX on June 16th, 2014.

 

[Panaman]

Opinions anyone, down about 5% from its listing price, bit of a new fish (just what are alternative investments?) With what and how it invests, been looking at a parcel for my SMSF as the manager seems to have very good track record.

 

[HelloU]

following the recent....events....the exit just announced from the kiddie thing at about 20% under book is........ummm......I do not care about the kiddie loss per se but makes me VERY keen to see how the remaining valuations get written up here (particularly with the new board)....and can only wonder what the kiddie value would have been if not exited. Thoughts?

 

[HelloU]

......I do not care about the kiddie loss per se but ...

to anyone familiar with this......what I mean is that in business a realised 'loss' does not bother me as it is just part of the cut and thrust.....this actual kiddie 'loss' though is of concern due to the book-keeping/fee-structure that surrounds it.

 

[HelloU]

...and COB 14th of May and no NTA announcement.........maybe waiting for the 15th.........new management style perhaps to go with new management.

 

[Garpal Gumnut]

The Blue Sky Alternatives Access Fund Limited (BAF), through BSAAF Management Pty Ltd (the Manager), invests in a diversified portfolio of Alternative Assets managed by Blue Sky Entities. Currently these asset classes include Real Assets, Private Equity and venture capital, Private Real Estate and Hedge Funds. Under the Company's investment mandate, each asset class must represent no more than 40% of the total value of the Company's assets.It has office in Australia and United States.
With the present instability and possibility of another GFC a few eggs in this basket may be advisable.
It's my pick for the November comp 2018.

 

[Dona Ferentes]

Key progress in transitioning Blue Sky Alternatives management rights to Wilson Asset Management

The Board of Blue Sky Alternatives Access Fund Limited (ASX: BAF) announced on Tuesday it is progressing the appointment of Wilson Asset Management as its investment manager, on the basis of the in principle terms announced on 28 February 2020. The Wilson Asset Management team is looking forward to engaging with BAF shareholders and providing retail investors with exposure to exciting alternative asset opportunities.

The Board of BAF will soon provide a further update to the market on the agreed terms and the timeline of events.

 

[HelloU]

this thing chugs along well under nta.
idle thought is that maybe with wilson there is an opportunity to do some catch up closer to nta?
(but no doubt they will do a fresh valuation at commencement, so stand by for that as part of that thinking)

funny story, back in the blue sky chaos days this thing did a share buy-back (using spp funds ) and would pre-announce what days it would be buying........ the days it was buying the SP always went up .... so the ideal time to buy was the day before the "buy-back" days. Took a month or so for them to realise what was happening and stop doing those announcements.

 

[Dona Ferentes]

BAF today entered into a deed of termination with BSAAF Management Pty Ltd, the Company’s existing manager, Wilson Asset Management and the underlying fund level managers, as well as a transitional services agreement with BSAAF and Wilson Asset Management, to facilitate the transition of the Company’s investment management services to Wilson Asset Management.

Shareholder approval needed .... early Sept

New name. New strategy and positioning. New aspiration to grow bigger. Cap raising or 2 down the track.

- from 73c to 79c on today's news. Still 20% below NTA (.....and all of Geoff Wilson's skills needed to remove THAT discount)

 

[Dona Ferentes]

BAF still trundling along.... was in mid to high 70's for weeks then rose through to 85c this week.

and voila, an Update; the Wilson ascension is nigh. just need pesky shareholders to vote.

There are a few sweeteners outlined in the update: as 'negotiated', retention of fee discounts plus

In addition to selecting WAMI as the chosen investment manager for the Company, the Board has secured on behalf of shareholders the inclusion of a ‘Premium Target’ objective within the new management arrangements. The principle of the Premium Target is simple: the Company’s share price needs to trade at a premium to its pre-tax net asset value for a period of one month for it to be achieved. If this does not occur at least three times during the next five years, shareholders will automatically have the right to vote to terminate the arrangements with WAMI, and to liquidate the Company.

Based on the current discount to pre-tax NTA that BAF shares trade, a successful achievement of the ‘Premium Target’ represents a 28% uplift to the current share price.

that discount is persistent. As well as the high cash balance, a significant number of assets still held have solid valuations*

Excluding the cash holding of the Company, the current BAF share price implies a valuation of $110 million, or $0.57 per share, for the Company’s diversified portfolio of agricultural and private equity assets, a 29% discount to their carrying values. Moreover, the Company has a $68 million investment in the Argyle Water Fund, the value of which is independently reviewed each month with reference to observable market prices. Further excluding the water fund investments from the Company’s current market capitalisation results in an implicit market value of $41 million for BAF’s remaining investment portfolio. This compares to their assessed fair value of $87 million, an effective discount of 53%.

* must be read with the appended footnotes in the Update.

Whether Mr Wilson and his brand of value assist will be enough to resurrect BAF soon to be WAF remains to be seen. The newcomers have also stated, elsewhere, a desire to lift FUM to $1 billion. I can only imagine this will involve serial capital raisings which, of themselves, would surely depress the SP. Rather a tricky situation, IMO.

 

[Garpal Gumnut]

BAF's last iteration began with water and burritos and progressed through property in Manhattan and the usual capital raisings until falling, to now rise like the proverbial phoenix.

All aboard, choo, choo.

https://www.businessnewsaus.com.au/...a-timeline-from-asx-powerhouse-to-pariah.html

gg

 

[Dona Ferentes]

99.7% on board to move manager to WAM Alternative Assets. Expect a name change soon.

SP now in the 90's; narrowing the NTA gap.

And selling it to the Wilson faithful.

 

[Dona Ferentes]

"On Tuesday, shareholders of Blue Sky Alternatives Access Fund Limited (ASX: BAF) overwhelmingly voted in favour of our proposal to see the Company join the Wilson Asset Management stable as WAM Alternative Assets Limited (ASX: WMA) at an Extraordinary General Meeting."

"In managing WAM Alternative Assets, we will provide Australian retail shareholders with access to alternative investment opportunities managed by a strong team. We will engage with current shareholders and market to new shareholders with a plan to return the share price to a premium to net tangible assets (NTA). We look forward to announcing the Portfolio Manager responsible for WAM Alternative Assets in the coming days."

 

[Dona Ferentes]

- now it has come off, it is an interesting read from one of the participants:

GVF’s portfolio benefited from two significant developments during August. The first was a substantial share price re-rating in Blue Sky Alternatives Access Fund BAF, one of GVF’s largest holdings and an investment that we have been intimately involved with for some time. We first invested into BAF in late 2018 after a high profile short-seller’s report came out against the parent company of BAF’s investment manager. This report made a number of allegations, including an assertion that many of the assets that the Blue Sky group managed were materially mis-valued. These allegations were sensationalised in the press and, in our view, served to create a narrative in the market that material write-downs to the carrying values of BAF’s assets were imminent. While the countless press articles written about the Blue Sky saga made for dramatic reading, we did our own thorough due diligence on the BAF investment portfolio before investing. Our conclusion was that the underlying portfolio of agricultural, real estate and private equity assets were worth substantially more than the then prevailing share price. At the time this was a controversial view.

In mid-2019, Miles Staude, GVF’s portfolio manager, joined the BAF board to add his expertise to the necessary process of extracting the company from its existing management arrangements and rejuvenating the BAF investment proposition. With the parent of BAF’s investment manager having gone into administration, this exercise required lengthy and determined negotiations with a number of different counterparties. Pleasingly, during August, the BAF board announced that it had finalised these negotiations and that an extraordinary general meeting (EGM) would be held in early September to approve the terms the BAF board had secured. On 8 September, BAF shareholders voted overwhelming in favour of the new arrangements for the company. These involve moving the investment management function of BAF to Wilson Asset Management International, whilst still also retaining many of the valuable benefits shareholders enjoyed under the old management arrangements. In addition - and much to their credit - WAMI have agreed to a new ‘Premium Target’ objective in their appointment as manager. The principle of the Premium Target is simple: BAF’s share price needs to trade at a premium to its pre-tax net asset value for a period of one month for it to be achieved. If this does not occur at least three times during the next five years, shareholders will automatically have the right to vote to terminate the arrangements with WAMI and to liquidate the company. Our view is that this feature provides a strong alignment between WAMI and its shareholders in terms of tackling the key challenge the company faces, namely the large discount to asset backing that its shares trade at.

From the beginning of FY2021 through to the time of writing, BAF has already delivered a total shareholder return of 28%. Despite this, the shares today continue to trade on a large discount to their pre-tax asset backing and we continue to see exciting upside from here, as the benefits from the new management arrangements begin to come into effect.

Thankfully, not all of GVF’s investments require us to roll up our sleeves and expend the amount of energy that BAF has required. What was unique about this situation was the very deep levels of value that were on offer and our belief that we could affect positive change for the benefit of all shareholders. Finally, it is worth highlighting that while our original view on the true quality of the BAF investment portfolio was controversial at the time, it has ultimately been validated. There have been no significant asset impairments during the time GVF has been invested in the company. Instead, the most important developments have been impressive total returns from the Argyle Water Fund – by far BAF’s largest investment – and a substantial uplift that occurred from the successful sale of the student accommodation portfolio. This exit took place in October 2019 at a 17% premium to carrying value.

- from Global Value Fund (GVF) August Investment update.

 

[System]

On October 19th, 2020, Blue Sky Alternatives Access Fund Limited (BAF) changed its name and ASX code to WAM Alternative Assets Limited (WMA).

 

[Dona Ferentes]

- now it has come off, it is an interesting read from one of the participants:

What was unique about this situation was the very deep levels of value that were on offer and our belief that we could affect positive change for the benefit of all shareholders. Finally, it is worth highlighting that ... our original view on the true quality of the BAF investment portfolio ... has ultimately been validated. There have been no significant asset impairments during the time GVF has been invested in the company. Instead, the most important developments have been impressive total returns from the Argyle Water Fund – by far BAF’s largest investment...

- from Global Value Fund (GVF) August Investment update.

But I can't stop wondering about Argyle, and how it is run

The Riparian Water Fund will invest across a diversified portfolio of water entitlements, across a range of farming systems, regions, commodities, and users. With only $10M under management at present, it is expected large US institutional mandates (up to $200M) will soon be placed. From an IM (available to wholesale investors)

• The founding members of Riparian Capital Partners (managers of the new Water Fund) were previously employed by BlueSky. Some key data points regarding their investment experience that may provide useful context. Please note, this has been compiled from publicly available resources – and though not a complete track record, is indicative of the founding members’ deep experience.
  • Michael Blakeney was a part of the Blue-Sky Real Assets team from the 3rd March 2014 – 20 February 2019. During this time Michael was a senior member of the team, a board member and a member of the investment committee. In reference to the BlueSky Shareholder presentation, the business reported returns of 21.9% p.a. net of fees for the period starting 1 Jan 2014 – 31st December 2018, a period that closely replicated Michael's tenor at the firm
  • Nick Waters and Matthew Houlahan joined BlueSky June 2016 and January 2016 respectively. Nick was primarily responsible for the Water Fund and associated water investment strategies. Nick and Matthew were responsible for the acquisition of approx. $300M in water entitlements. In reference to the BlueSky Shareholder presentation, the business reported returns of 18.99% p.a. since inception net of fees (1 August 2012 – 31st December 2018)

 

[Dona Ferentes]

WMA has travelled sideways as the new management looked to figure out what to do? A new portfolio manager hasn't eaten into or spent the large cash pile that has been sitting there. The NATA has hovered around the $1.15-1.17 mark for several months. But recently, a relationship has been formed with a mid tier Private Equity manager, Adamantem Capital. There have been two placements, into Climate Friendly, and Linen Services.

WMA had been trading below $1 for a while, but recent buying has seen it lift to $1.05 today.

Bell Potter has featured it recently:

WMA currently invests in a diverse range of alternative asset classes, including but not limited to: (1) private equity, (2) real assets, (3) real estate and (4) cash. Wilson Asset Management, by way of appointment as the Investment Manager of the Fund in October 2020, has also agreed to adhere to a ‘Premium Target’, an uncommon objective in the Australian LIC market which would see shareholders empowered to vote on wind-up if shares fail to trade above the pre-tax NTA at least 3 times over the next 5 years. With yields remaining depressed, alternative assets, like fixed income securities, exhibit a similar low correlation to equities with strong annuity-style returns. Leveraged to Australia’s comparative advantage, the substantial allocation to agricultural assets and water entitlements may be the driver of future returns amid further supply-chain disruptions and price increases.

 

[Dona Ferentes]

WMA has travelled sideways as the new management looked to figure out what to do? A new portfolio manager hasn't eaten into or spent the large cash pile that has been sitting there. The NATA has hovered around the $1.15-1.17 mark for several months.

WMA had been trading below $1 for a while, but recent buying has seen it lift to $1.05 today.

Time for a revisit as the 4D Half Yearly is out.

And not too much happening.

• A 2c ff dividend was announced recently for April ... WMA will be paying twice yearly (shareholders like that sort of thing).
• NTA now $1.23. Still trading under this level, most recently about $1.10 having had a giddy-up in price from $1.020 during Feb, though volume still muted.
• Still holding on to high cash amounts and number of assets is lower. Taken on investment partners to help identify opportunities: Palisade - Specialist infrastructure fund manager; Barwon - Boutique real estate fund manager; Adamantem Capital - Mid-market private equity fund manager.
• Principal activity The principal activity of the Company is to provide retail investors with exposure to a portfolio of real assets, private equity and real estate. The Company aims to expand into new asset classes such as private debt and infrastructure. The Company has investment objectives to deliver absolute returns through a combination of dividend yield and capital growth, while providing diversification benefits to shareholders. No change in this activity took place during the period or is likely to in the future.
• Operating and financial review Investment operations during the half year resulted in an operating profit before tax of $15,076,142 (2020: $5,171,718) and an operating profit after tax of $11,425,491 (2020: $4,221,376). The profit for the period is reflective of the solid performance of the investment portfolio over the six months to 31 December 2021. The investment portfolio increased 7.6% in the six months to 31 December 2021, with an average cash holding of 24.2%, and increased 17.6% in the 12 months to 31 December 2021, with an average cash holding of 24.7%.
• During the period, our investment partner Fortitude Investment Partners successfully completed the sale of the underlying asset in its QFS fund. The asset was a food service and distribution business based in Queensland. Also during the period, our investment partner Argyle Capital successfully completed the sale of the underlying assets in its Agriculture Fund II and Solar Fund. The Agriculture Fund II asset was an irrigated citrus orchard near Hillston in New South Wales that had been owned and redeveloped since late 2015, and the Solar Fund asset was a solar farm located in Queensland that reached full production in early 2018. The exit proceeds, received during the period, have provided additional capital to deploy as we continue to implement our revitalisation strategy for the investment portfolio.

• Unlisted private equity funds
  Unlisted private real estate funds
  Unlisted real assets funds
  Unlisted infrastructure funds
• Due to the inherent uncertainty of the valuation of the unlisted funds, the values used and the methodologies and assumptions adopted in the valuation may differ significantly from the values that would have been used had a ready market for the investment existed and the differences could be significant.
  

 

[Dona Ferentes]

WMA plodding along. Still trading under NTA ($1.09 now; vs $1.25 as at 30 Apr). And now there seems to be a bit of a tilt, looking to generate some cash by selling down (?) the biggest holding to redeploy in other asset classes.

One of the best performing positions within the Company’s investment portfolio is its investment in the Argyle Water Fund, managed by its investment partner Argyle Capital Partners. This investment represents 35.1% of the Company’s investment portfolio through a direct investment and an indirect exposure through its investment in the Strategic Australian Agriculture Fund, as at 30 April 2022. The exposure to the Argyle Water Fund has grown over time since the Company’s inception in 2014.

As part of the Company’s revitalisation approach and long-term investment outlook, Wilson Asset Management will look to gradually re-position its exposure to the Argyle Water Fund between 15% and 20%. This re-positioning will further facilitate a combination of high quality assets within the portfolio and enable the Company to enter into new investment opportunities in other asset classes such as private debt and infrastructure.

 

[Dona Ferentes]

Bell Potter view:

WMA currently invests in a diverse range of alternative asset classes, including private equity, real assets, real estate and cash. With interest rates gaining pace and stagflation a risk, alternative assets can exhibit strong annuity-style type total returns (capital and income), with low or even negative correlations to the equity market.

All exits across the portfolio since Wilson Asset Management acquired the mandate in October 2020 have been achieved in excess of their carrying value. The Company currently holds 27.0% in cash, 25.0% of which has been committed to capital investment opportunities in infrastructure, healthcare real estate, industrial last mile real estate, mid-market buy-out private equity and turnaround/special situation private equity strategies.

Stripping all cash out of the Company would suggest a 22.2% discount on the residual invested net assets.

...... and likely to remain below. The eponymous G Wilson bought about $6million of the old BAF before he got his paws on it, mostly at a huge discount. Subsequently, has stated if the new team can't get it to NTA within 5 years, then it would be wound up. At NTA. He'd be in his mid 70's by then, so it sounds like a good retirement payout.