The fund manager Wilson Asset Management (WAM) has told investors about two compelling ASX shares that it has in its portfolio.
WAM operates several listed investment companies (LICs). Some, like WAM Leaders Ltd (ASX: WLE), focus on larger companies.
There's also one called WAM Capital Limited (ASX: WAM) which targets "the most compelling undervalued growth opportunities in the Australian market".
The WAM Capital portfolio has delivered an investment return of 15.9% per annum since its inception in August 1999, before fees, expenses and taxes. This gross return outperformed the All Ordinaries Total Accumulation Index (ASX: XAO) return of 8.4% per annum over the same timeframe.
These are the two ASX shares that WAM Capital outlined in its most recent monthly update:
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Champion Iron Ltd (ASX: CIA)
Champion Iron is headquartered in Canada. It is described by WAM as a premium iron ore miner which is exploring the Bloom Lake and Fire Lake projects in the Canadian province of Quebec.
The fund manager pointed out that in January, Champion Iron announced its third quarter update, which showed that its growth project 'phase II', remained on track for completion in April.
The ASX share also announced its first dividend of C$0.10 per share, whilst also investing for growth.
Champion Iron has increased its leverage to higher iron ore prices as it progresses its growth projects, which are expected to double output this year.
WAM is bullish on Champion Iron and expect "considerable" free cash flow to be generated by the completion of the phase II project.
BWX Ltd (ASX: BWX)
BWX is an Australian-based company that is engaging in developing, manufacturing and marketing beauty and personal care products.
The ASX share has a number of brands in its stable – Sukin, Andalou Naturals, USPA, Mineral Fusion, Flora & Fauna, Nourished Life and now Go-To Skincare.
WAM says that the company's expansion in the US and UK is gaining traction. Coupled with new products and a large distribution network, this is driving growth in their share of the market.
The fund manager is unfazed by the resignation of the CEO David Fenlon, who is moving into a non-executive director position on the BWX board.
Business continuity has been demonstrated by the appointment of the successor – the BWX chief operating officer – Rory Gration.
