(ASX code WAB)
Wallace Absolute Return Limited ABN 58 100 854 788 has been established with the objective of providing investors with consistent positive returns in both rising and falling markets. WAB’s range of performance outcomes over time is expected to be less variable than traditional funds and will be determined more by its investment philosophy and process rather than overall market movement.
WAB has the freedom to use trading strategies, which are often unavailable to traditional investment managers. These alternative strategies principally involve selling relatively expensive shares and buying relatively inexpensive shares (“Relative Value Trades”). If the market falls, the expensive shares should fall by more than the inexpensive shares and conversely, if the market rises the inexpensive shares should rise more than the expensive shares. As the net exposure to the market is small (cash realised from the shares sold will fund the purchase of further shares), WAB is able to prudently work its capital to enhance performance (whilst maintaining a lower risk profile).
Relative pricing anomalies are subject to the same sentiment, regulatory, mandate or analysis inefficiencies as individual stocks. The Directors consider that mispriced shares have a tendency to overshoot as some traditional funds, which are benchmarked against the performance of various indices, chase outperforming and abandon under performing shares.
The Company predominantly invest in ASX listed securities. The majority of the money raised has been invested in Australian equities.
The Company focuses on active capital management which may involve the buy-back of its Shares when its Shares are trading at a sizeable discount to its net tangible asset backing, the issue of Shares at net tangible asset value per share after the IPO and the issue of other Securities through bonus issues, rights issues and option issues, with a view to enhancing the value of the Securities held by the investor. The Company also has a dividend reinvestment plan. The Board has determined that a 2.5% discount will be applied for the time being.
