It's confirmed: Geoff Wilson's WAM pitches to manage Blue Sky Alternatives Access Fund Ltd (ASX:BAF)

WAM wants to manage Blue Sky Alternatives Access Fund Ltd (ASX:BAF).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The details of the Wilson Asset Management (WAM) pitch to manage Blue Sky Alternatives Access Fund Ltd (ASX: BAF) has been confirmed this afternoon.

A draft Investment Management Agreement has been announced to the market and will now be assessed by the non-executive directors.

WAM believes that its proposal is superior to the one offered by Pinnacle Investment Management Group Ltd (ASX: PNI).

There are a number of benefits that WAM pointed to:

WAM is a specialist LIC manager with the majority of its LICs like WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX) trading at a premium to the underlying net tangible asset (NTA) backing. WAM Capital, the largest, is trading at a premium of more than 20% to the September 2018 announced NTA.

However, WAM pointed out that the three LICs managed by Pinnacle are all currently trading at discounts to their respective NTAs. It is logical and fair to suggest that current shareholders want the share price to rise to a premium.

WAM has a long track record of strong performance and good engagement with shareholders, so Blue Sky Alternatives Access Fund shareholders would be benefit from quality stewardship.

How the new agreement would work

Under the new investment mandate for a diversified alternatives multi-manager approach, WAM would select market-leading investment managers in a particular asset class under the guidance of an experienced investment committee with access to a wide range of investment professionals.

No performance fee would be charged by WAM, however WAM would be entitled to an annual management fee of 1%. There would be an initial fee-free period on existing Blue Sky Alternative Investments Ltd (ASX: BLA) managed investments, which would cease its role as manager at a mutually agreed date – WAM suggested December 2018.

The agreement would be for an initial five years and the new Board of Directors would be committed to capital managements to ensure the share price of the company reflects the underlying asset value of the portfolio.

Foolish takeaway

I took Blue Sky Alternatives Access Fund off my watchlist after the whole debacle at Blue Sky. However, if WAM were in charge it would definitely go back onto my watchlist. If I were a shareholder I would vote for WAM over Pinnacle.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Happy young woman saving money in a piggy bank.
Index investing

Did you know these ASX stocks are in the Vanguard Australian Shares Index ETF (VAS)?

The VAS ETF is an index fund that tracks the 300 biggest listed companies by market capitalisation.

Read more »

Hands reaching high for a trophy with a sunset in the background.
Record Highs

The ASX 200 Index is on its way to another all-time high today. Here's why

These blue chip stocks are driving the index towards a new record today...

Read more »

Group of friends trading stocks on their phones. symbolising the 3 most traded ASX 200 shares today
Share Market News

3 ASX mining stocks topping the most-traded list in October

Chinese stimulus news and company announcements likely contributed to the higher trading activity.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Share Gainers

3 ASX 200 stocks smashing the benchmark this week

These three ASX 200 stocks are leading the charge this week. Here’s how.

Read more »

Two people tired and resting after sports race.
Broker Notes

Fundie rates 2 ASX 200 stocks in short-term pain but with long-term gain potential

Blackwattle Investment Partners sees these 2 ASX 200 stocks as worthy of a buy and hold strategy.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why A2 Milk, EOS, GQG, and Mineral Resources shares are racing higher today

These shares are ending the week strongly. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Megaport, Pilbara Minerals, Vysarn, and WiseTech shares are falling today

These shares are ending the week in the red. But why?

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »