Wilson Asset Management has told shareholders 2020 was a cracker across its portfolio Listed Investment Companies and a handful of stocks deserved particular credit.

The fund manager, headed by Geoff Wilson, runs a number of Listed Investment Companies (LICs) on the ASX.

Shares in LICs can be bought and sold like individual ASX companies but behind the scenes are share buyers and sellers in their own right.

In its monthly investment update, Wilson Asset Management shares which ASX stocks performed particularly well across its portfolio.

 

The ASX microcaps Wilson Asset Management likes

Of all its ASX-listed funds, the WAM Microcap investment portfolio was the best, gaining 28.7 per cent in 2020.

Holdings it named were recent listees, cloud provider Sovereign Cloud Holdings (ASX:SOV) and fragrance retailer Dusk Group (ASX:DSK).

Wilson expects both to benefit from positive thematics, namely cybersecurity growth and investment for Sovereign (also known as AUCloud) and consumers being stuck at home for Dusk.

“During the coronavirus pandemic, Dusk has benefited from consumers spending more time at home which has led to increased demand for comfort-related products,” it said.

“The company estimates net cash at the end of December of approximately $33.5 million and we continue to see a positive outlook for the company driven by the roll out of new stores across Australia.”

As for AUCloud it said, “AUCloud is well positioned to capitalise on these investment initiatives as a direct provider of IaaS services and through a channel partner selling into the Australian Government or ADF.”

 

Capital means power

It’s WAM Capital fund increased by 9.6 per cent in the 2020 calendar year – outperforming the ASX All Ordinaries Accumulation Index by 6 per cent.

Wilson Asset Management named holiday and lifestyle community operator Ingenia (ASX:INA) and mortgage broker aggregator Australian Finance Group (ASX:AFG).

In relation to Ingenia it credited domestic tourism as well as earnings positive acquisitions made in 2020. As for AFG it credited the favourable buying conditions that exist in the home loan market.

“We see a positive outlook for the company going forward, driven by a combination of record low interest rates, government stimulus measures and improving consumer confidence,” it said.

 

Resources

Looking to resources, Wilson Asset Management credited two stocks for the solid performance of its Leaders LIC, which rose 12.7 per cent in 2020.

The pair were mining giants BHP (ASX:BHP) and IGO (ASX:IGO).

Wilson noted investors are excited about IGO’s entry into lithium, and it is too.

“This transaction aligns with IGO’s long term strategic plan to support the structural shift into battery storage, with the company noting electric vehicle sales are expected to grow 18 per cent per annum through to 2030,” it said.

“If IGO announce the divestment of its Tropicana gold mine, we expect this will be a further positive catalyst for the share price of IGO.”

BHP meanwhile has a foot in several doors producing several commodities. While Wilson argues iron ore is the driver right now, the drivers could change to oil, nickel and copper in 2021.

“Over the near term, we expect oil prices to be supported by a continued recovery in coronavirus-related demand, for example travel and industrial production while over the longer term, a catch up in capital expenditure should see a significant tightening in supply,” it said.

“We are constructive on nickel and copper for the same electric vehicle thematic noted in IGO.”

The one other resources stock Wilson Asset Management named in its outlook was mining services company Imdex (ASX:IMD).

“The company is set to benefit from increasing commodity prices in gold, copper and iron ore, which form 82 per cent of its commodity exposure and should contribute to increased levels of exploration expenditure in 2021,” it said.