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Key points
- WAM has revealed two ASX shares that are liked in the WAM Active portfolio
- TPG Telecom is one buy-rated stock, with merger synergies and a potential asset sale as positives
- Mincor Resources is a nickel player which is making promising progress in WA
Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in one of its portfolio.
WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).
There's also one called WAM Active Limited (ASX: WAA) which looks at businesses it thinks are the most undervalued.
WAM says WAM Active invests in market mispricing opportunities in the Australian market.
The WAM Active portfolio has delivered gross returns (that's before fees, expenses and taxes) of 11.8% per annum since inception in January 2008, which is superior to the Bloomberg AusBond Bank Bill Index return per annum of 2.9%.
These are the two ASX shares that WAM outlined in its most recent monthly update:
TPG Telecom Ltd (ASX: TPG)
TPG is a business that owns and operates mobile and fixed networks. It is the owner of a few of Australia's most well-known brands including Vodafone, TPG, and iiNet.
The fund manager pointed out that in early December, founder David Teoh entered into an agreement to sell around 53.1 million TPG Telecom shares, which led to a sell-off of the TPG share price.
WAM also noted that the spread of the Omicron COVID variant also weighed on the company during the month as it reduced the number of international visitors, leading to a reduction in its consumer subscriber numbers.
WAM Active remains invested in TPG and the fund manager remains optimistic about the company's fixed wireless rollout strategy which should help increase profit margins.
The fund manager thinks the base business of the ASX share is undervalued considering its growth profile over the next few years, it likes the risk-reward profile. WAM is particularly attracted by the potential sale of the mobile tower business which could take place over the coming months.
Mincor Resources NL (ASX: MCR)
The other ASX share outlined was Mincor Resources. This business is focused on re-establishing sustainable, high-grade nickel production in the Kambalda district of Western Australia.
WAM points out that in December, the business provided an exploration update that said nickel had been extracted from two development headings at Kambalda. The fund manager said this was a key achievement in the company's nickel restart plans and supported the investment thesis.
WAM's bull case for the company is that there is potentially significant undiscovered nickel sulphide at the company's Kambalda site.
WAM invested in Mincor Resources because of its high-quality management team, the projects which are key to the BHP Group Ltd (ASX: BHP) nickel strategy, and the potential for nickel sulphide discoveries.
WAM Active continues to own Mincor Resources shares because the fund manager believes it will continue to grow its resources as it nears production in 2022.
