WAM Microcap Limited (ASX: WMI) has reported that it will increase the interim dividend in the HY19 result.

WAM Microcap is a listed investment company (LIC) operated by investment firm Wilson Asset Management to invest in shares that typically have market capitalisations under $300 million.

What WAM Microcap reported

During the second half of 2018 to December 2018, the S&P/ASX Small Ordinaries Accumulation Index fell by 12.7%.

WAM said that volatility arose during the half with slowing economic growth in major global markets, quantitative tightening and rising interest rats in the US, the US-China trade war and the ongoing uncertainty with Brexit.

WAM also said that the Australian share market also had a number of factors to contend with including weaker economic growth (particularly in September), Federal Government instability, Labor proposals, the Royal Commission and falling property prices.

The WAM Microcap portfolio decreased by 6.2% in the half year to 31 December 2018, outperforming the index by 6.5%, leading to an operating loss after tax of $8.4 million.

Some of the retail shares that WAM Microcap owned that saw significant declines were Noni B Limited (ASX: NBL), City Chic Collective Ltd (ASX: CCX) and Baby Bunting Group Ltd (ASX: BBN) which fell by 22.1%, 26% and 6.9% respectively in the December quarter according to WAM.

However, some of WAM Microcap’s winners were Jumbo Interactive Ltd (ASX: JIN), Acrow Formwork and Construction Srvc Ltd (ASX: ACF), Pinnacle Investment Management Group Ltd (ASX: PNI), Infomedia Limited (ASX: IFM) and PWR Holdings Ltd (ASX: PWH).

WAM Microcap Dividend

Utilising the LIC’s previous investment performance and profit reserve, the WAM Microcap Board has declared an interim dividend of 2.25 cents per share, which represents a 12.5% increase compared to the dividend paid a year ago.

Is WAM Microcap A Buy?

WAM Microcap decreased its cash position from 39.3% at the end of December 2018 to 32.1% reflecting renewed positive market conditions with the US Federal Reserve holding interest rates for the foreseeable future, that quantitative tightening might be over for now and China’s President Xi Jinping increasing China’s stimulus significantly.

One of the ways to beat the market’s return could be by using a fund manager like WAM Microcap that looks at smaller businesses, but investors should be aware of the fees involved – both the 1% annual management fee and 20% outperformance fee.


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Disclosure: At the time of publishing Jaz owns shares of WAM Microcap, but that could change at any time.