The AVITA Medical Inc (ASX: AVH) share price has shot well into the green in lunchtime trade on Wednesday.

At the time of writing, the company’s shares are 19.88% higher at $2.05 apiece on no news.

In broader market moves, the S&P/ASX 200 Health Care Index (ASX: XHJ) is 0.35% lower so far today.

Let’s check what may be going on.

What’s up with the Avita Medical share price?

It’s been a quiet few months from the regenerative medicine company, although not so much on the charts.

Avita shares have eroded more than 40% this year to date, after gliding from a high of $5.61 on 2 September 2021.

They found a bottom almost a year later at $1.32 on 17 June.

However, the healthcare share has caught a bid since then and now trades more than 42% higher on the month, and up 27% in the past five days of trade.

While there’s been no news from Avita’s end, two things stand out. First, the company is set to report earnings next week on 11 August.

Second is that healthcare shares have been strengthening ever since we rolled into the new financial year.

As seen on the chart below, both the healthcare benchmark index and the Avita share price bounced from lows in late June and have curled up since.

In the absence of any company-specific updates, it stands to reason the share might be attracting buyers on the back of this sector strength.

With Avita due to post earnings next week, investors may also be expecting a strong report from the company.

Either way, it looks a little early to tell if the Avita share price has completely turned the corner. In the last 12 months, it is down 61% and has some catching up to do.

The post Why is the Avita Medical share price tracking 20% higher today? appeared first on The Motley Fool Australia.

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More reading

• Bell Potter names 2 of the best ASX healthcare shares to buy in FY23

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Nasdaq Inc. (NASDAQ: NDAQ), the company that owns the Nasdaq Composite Index and the Nasdaq Stock Exchange, had a better month than the index, according to S&P Global Market Intelligence. 

Nasdaq Inc. returned 18.6% in July, beating the S&P 500, which was up 9.1% for the month, and the Nasdaq Composite, which gained 12.4% in July. The company’s stock is down 15% year to date as of today, beating the Nasdaq Composite, which is down 21% so far in 2022.

So what

The primary catalyst for Nasdaq in July was its second-quarter earnings report, which showed a 10% year-over-year gain in revenue to $1.5 billion and a 6% rise in net revenue to $893 million. In addition, adjusted earnings per share (EPS), taking out gains in the prior year from divestitures, was up 9% year over year to $2.07.

All four of its business segments saw revenue gains, led by Market Technology (solutions for institutional investors in trading and settlement, and financial-crime deterrence, among other areas), which was up 12%.

Corporate Platforms — encompassing index listing services, as well as investor relations and ESG (environmental, social, governance) services — was also up 12% year over year. 

The largest segment, Market Services, which includes revenue from trading on the exchange, was up 11%. Investment Intelligence, which generates revenue from market data and intelligence and licensing its indexes, saw an 8.5% spike in revenue year over year.

The growth of its businesses outside of Market Services gives Nasdaq not only multiple revenue streams and growth opportunities, but also diversity in the types of revenue it generates. The company has increased its amount of recurring revenue from subscriptions, particularly within the Market Technology segment, via its software-as-a-service (SaaS) offerings. Revenue from SaaS rose 12% year over year and makes up 35% of recurring revenue.

Now what

The other big driver for Nasdaq was the finalization of a planned 3-for-1 split. It was first announced in April, and in July it was approved. After Aug. 12, every shareholder will get two additional shares of the stock, currently about $177 per share, for each share they own. The new shares will be given out on Aug. 26, and the stock will begin trading at the new split-adjusted price on Aug. 29.

The idea is to make the stock more accessible to more investors at a lower entry price, thus boosting liquidity. The market reacted to the move with approval, as the price jumped sharply on the news when it came out on July 20. There are a bunch of high-profile stock splits coming on the Nasdaq exchange, and that is generally good for Nasdaq Inc. as it creates more trading activity. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why did the Nasdaq share price rocket 19% in July? appeared first on The Motley Fool Australia.

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More reading

• When were insiders last buying up Appen shares?
• Why is the Avita Medical share price tracking 20% higher today?
• Metalstech share price soars 11% on ‘milestone achievement’
• Pilbara Minerals share price dips despite upbeat lithium outlook
• Making money even while stock markets fall

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nasdaq. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Metalstech Ltd (ASX: MTC) share price is lifting into the green in early trade on Wednesday.

At the time of writing, the gold and lithium explorer is trading around 11% higher at 40.5 cents apiece following the release of a company announcement.

Metalstech has caught a large bid today with investors driving the share price higher on a volume nearly 3 times the 4-week trading average.

What did Metalstech announce?

The company announced the results of the scoping study concerning its fully-owned Sturec Gold Mine in Slovakia.

The release notes the study results indicate that “project economics and technical viability are highly encouraging” in the company’s quest to become a low-cost gold concentrate producer.

Projections from the study indicate the Sturec mine could support gold and silver production of around 1 million ounces over an initial mine life of 15 years open cut and 10 years underground.

It also showed plant capacity could reach up to 1.5 million tonnes per annum. Based on the current gold price of US$1,780/oz, Metalstech says the net present value (NPV) of the project is A$512 million.

This is built on the fact mining at Sturec exhibits an operating margin in excess of 267%, the company says.

Speaking on the results, CEO Gino D’Anna said the study brings the “rebirth of one of Slovakia’s historic mining operations”.

“The scoping study has demonstrated potential for a robust mining operation at Sturec with a forecast [all-in sustaining cost] of US$754/ounce and a capital payback period of 2.3 years (post-tax) from first production”, he added.

The Metalstech share price is up more than 122% in the past 12 months, or 40% this year to date.

The post Metalstech share price soars 11% on ‘milestone achievement’ appeared first on The Motley Fool Australia.

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More reading

• Pilbara Minerals share price dips despite upbeat lithium outlook
• Making money even while stock markets fall
• ASX share price sinks as CHESS replacement delayed
• ‘Essential foundation for success’: Lynas share price leaps on $500 million expansion
• Why did the Uber share price surge 18% today?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Pilbara Minerals Ltd (ASX: PLS) share price is tracking lower in morning trade on Wednesday.

At the time of writing, the company’s shares are swapping hands at $2.71 apiece, down 1.09%, recovering from an earlier low of $2.62 a share.

Meantime, the broader S&P/ASX 200 Materials Index (ASX: XMJ) is also down 0.3% while the S&P/ASX 200 Index (ASX: XJO) is currently 0.4% lower.

The ASX lithium share released the results of its battery metals exchange (BMX) auction today and this is likely inflecting on the share price.

The company also released its presentation to the Diggers and Dealers Mining Forum, held from 1-3 August. Here are some of the details:

Pilbara Minerals’ value proposition on show

In its presentation, the company provided an overview of the market opportunity. It noted the lithium ‘deficit’ is expected to grow to approximately 1.8 million tonnes at base level.

Moreover, the price of lithium continues to remain strong with spodumene prices still commanding more than US$5,000 per tonne, according to the presentation.

Pilbara Minerals said it produced 377,902 dry metric tonnes (dmt) of spodumene concentrate in FY22 and shipped more than 361,000 dmt in the same period.

As part of the presentation, investors were shown a walk-through of the company’s plans on the way to achieving an output of one million tonnes per annum.

Pilbara Minerals projects “accelerated growth to capture improved demand conditions and increase revenue” in the coming years.

The company also gave an overview of its lithium battery project at a community school in the Pilbara. Here, the company will install a combined 33kW PV [solar photovoltaic] and lithium battery storage system in a partnership with Pacific Energy and the Strelley School.

It is set to provide a renewable energy source to replace diesel usage – currently at approximately 170-180 litres/day.

This will free up cash from the displaced diesel that will then be re-purposed for education, estimated at approximately $15-$25,000 per year.

In the last 12 months, the Pilbara share price has held a gain of more than 38% despite slipping into the red this year to date.

The post Pilbara Minerals share price dips despite upbeat lithium outlook appeared first on The Motley Fool Australia.

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• Pilbara Minerals share price on watch following lithium auction price update
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• Is the Pilbara Minerals value-add lithium strategy worth its salt?

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1) Overnight, the Dow fell 400 points or 1.2% after senior Federal Reserve officials said it was nowhere near finished with its fight against inflation.

In response, short-term interest rates moved higher, with two-year Treasuries climbing back above 3%. 

Quoted on MarketWatch, Neil Dutta, head of economics at Renaissance Macro Research, opined this perhaps “caps the upside to equity multiples”.

2) Try telling that to PayPal shareholders, of which I am one. 

This morning, after the US market close, even though the payments giant reported second quarter revenue growth of just 9%, the PayPal share price jumped more than 10% higher after saying activist investor Elliott Investment Management is now one of its largest shareholders.

PayPal also raised its forecast for earnings per share for the year to a range of $3.87 to $3.97, putting PayPal on a forward P/E multiple of around 25 times earnings.

In the heady days of cheap money, this was cheap. In today’s interest rate environment, especially for a company that only grew its second quarter top line by 9%, PayPal shares look fully valued. Still, I’m happy to celebrate today’s win. 

3) The S&P/ASX 200 Index (ASX: XJO) has fallen around 0.5% in early Wednesday trade, likely following US markets lower, as commodity stocks weighed on the benchmark index.  

With global equity markets adding roughly 10% in the past few weeks, a period in which the share prices of some of the previously beaten and battered stocks like Megaport (ASX: MP1) and Life360 (ASX: 360) have risen from the dead, perhaps we’re in a holding period in advance of reporting season.

4) In contrast to the US — where the latest inflation print was 9.1% — in light of a less hawkish tone from RBA governor Philip Lowe, some economists are suggesting the next interest rate rise will be a more moderate 25 basis points.

Quoted in the AFR, HSBC chief economist Paul Bloxham said he expects the RBA will pivot to smaller hikes from here as “the cooling housing market, weakening consumer spending and global downturn are set to worsen in the next few months”.

Better news for equity markets, but tougher times ahead for consumers. In these inflationary times, it’s hard to have your cake and eat it.

4) Earnings season is just kicking off here in Australia, with Pinnacle Investment Management (ASX: PNI) quick off the blocks, reporting a 14% jump in full-year profits and a 22% increase in its full-year fully-franked dividend.

Pinnacle reported a rare 6% drop in total funds under management (FUM) as volatile equity markets weighed on the fund manager. 

Still, considering the extreme dislocations investors have experienced, particularly over the past six months, it’s a solid result and a testament to Pinnacle’s diversified affiliate platform. 

The Pinnacle Investment Management share price soared almost 13% higher in morning trade, going some way to offset the near 40% fall from its November 2021 peak. 

In hindsight, like so many companies, as the great bull market neared its peak, it’s clear the Pinnacle share price got ahead of itself.

5) Stating the obvious, it’s been a tough year for most fund managers. Bucking the trend however was the WAM Leaders Ltd (ASX: WLE) investment portfolio. It increased by 9.7% for FY22, handily outperforming the index, which fell 6.5%.

With gross assets of more than $1.5 billion, WAM Leaders is one of the largest listed investment companies (LICs) on the ASX. The portfolio has holdings in many ASX 200 companies, including Commonwealth Bank of Australia (ASX: CBA), BHP Group (ASX: BHP) and National Australia Bank (ASX: NAB).

WAM Leaders trades on a fully-franked dividend yield of 5.3%. It’s good money, even as term deposit rates edge higher.

The post Making money even while stock markets fall appeared first on The Motley Fool Australia.

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• WAM Leaders share price rises on record year and dividend boost
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• This fund manager just bought more of these 2 ASX 200 blue-chip shares

Motley Fool contributor Bruce Jackson has positions in PINNACLE FPO and PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc., MEGAPORT FPO, PINNACLE FPO, and PayPal Holdings. The Motley Fool Australia has positions in and has recommended PINNACLE FPO. The Motley Fool Australia has recommended MEGAPORT FPO and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX Ltd (ASX: ASX) share price is in the red. Its tumble comes after the market operator announced that its long-awaited CHESS replacement likely won’t be operational until at least 2024.

The company has also commissioned an independent expert to assess the remaining work needed to deliver the software.

The ASX share price is $88.45 at the time of writing, 2.39% lower than its previous close.

Let’s take a closer look at the latest delay facing the implementation of updated trade processing software.

New CHESS not expected until late 2024

The ASX share price is slipping today. Its fall comes amid news the company doesn’t think its CHESS replacement system will go live until at least late 2024.

ASX and its application provider Digital Asset have found that more development is needed than was previously anticipated to make sure the software meets scalability and resilience requirements.

The company has brought in Accenture to review the work needed to deliver the application. The outcome of the review will be made public.

The expert will also work to help ASX communicate a new timetable for its implementation.

The CHESS system, an acronym for Clearing House Electronic Subregister System, facilitates the transfer of ownership of all ASX shares bought or sold. It also provides an electronic subregister for shares in listed companies.

The ASX began working on the CHESS replacement system in 2015. The company said it would likely miss its anticipated April 2023 implementation in March before confirming the delay in May.

ASX managing director and CEO Helen Lofthouse commented on the news weighing on the company’s share price today, saying:

CHESS is a critical system and we must have high confidence in the schedule to deliver new CHESS safely.

[I]t is important that we take time for a careful, independent review of the work done to date and the work still to do.

Existing CHESS remains secure and stable and continues to perform well as we transition to a replacement CHESS system.

Australian Securities & Investments Commission chair Joseph Longo and Reserve Bank of Australia governor Philip Lowe both said the delay is “disappointing”. Lowe continued:

The review initiated by ASX is an important step in providing assurance that the new CHESS application software will be fit for purpose. The replacement system must be safe and reliable to maintain investor confidence and the stability of Australia’s financial system.

ASX share price snapshot

Despite today’s dip, the ASX share price is outperforming this year.

It’s fallen just 4% since the start of 2022. That means it has outperformed the S&P/ASX 200 Index (ASX: XJO) by 4.5% in that time.

The post ASX share price sinks as CHESS replacement delayed appeared first on The Motley Fool Australia.

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• ‘Essential foundation for success’: Lynas share price leaps on $500 million expansion
• Why did the Uber share price surge 18% today?
• Is the Magellan share price a buy for its big dividend yield?
• WAM Leaders share price rises on record year and dividend boost
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Lynas Rare Earths Ltd (ASX: LYC) share price is marching higher in morning trade.

Lynas shares closed yesterday trading for $8.88 and are currently trading for $9.43, up 6.19%.

This comes as the S&P/ASX 200 Index (ASX: XJO) rare earths producer announced a half-billion-dollar expansion plan for its flagship project.

Lynas share price lifts off on $500 million project expansion

The Lynas share price is shrugging off the broader market selling pressure today after the miner announced a $500 million project to expand capacity at its Western Australia Mt Weld mine and concentration plant.

Lynas said the expansion is needed to meet fast-growing global demand for rare earth materials and NdFeB (neodymium) magnets.

According to the release, global demand for NdFeB magnets is expected to grow from 130,000 tonnes in 2020 to 265,000 tonnes by 2030. Most of the increase in demand stems from the fast-growing electric vehicle and wind turbine markets.

The miner said that in order to grow with the market, the “ambitious” 2025 growth plan it announced in May 2019 “must be accelerated and increased”.

As part of the accelerated growth plan, today Lynas announced a project that will substantially expand Mt Weld feedstock capacity, targeting 12,000 tonnes per annum NdPr (neodymium praseodymium) equivalent in 2024.

The initial expansion has been fully scoped and Lynas reported the roughly $500 million investment for this stage of the project is fully funded from cash flow. It added that the expansion project is based on known technology. The company says it will create some 300 jobs during the construction phase and more than 100 ongoing operational jobs.

What did management say?

Commenting on the project expansion plans that look to be driving the Lynas share price higher today, CEO Amanda Lacaze said:

This investment is supported by our high grade, long life and reliable source of feedstock, the remarkable Mt Weld ore body. Having a long life resource is an essential foundation for success in the rare earths market and the recent 1 kilometre deep drilling has demonstrated Mt Weld’s potential to supply feedstock for many years into the future.

The Mt Weld capacity expansion project aims to unlock its true value in the most efficient and sustainable way to 2025 and beyond.

Lynas share price snapshot

Though struggling in 2022, the Lynas share price remains up 22.8% over the past 12 months. That compares to a full-year loss of 7% posted by the ASX 200.

The post ‘Essential foundation for success’: Lynas share price leaps on $500 million expansion appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Rare earths are now in the red for 2022. What does this mean for the Lynas share price?
• What’s the outlook for the Lynas share price in FY23?
• Here’s why Macquarie thinks these 2 ASX 200 shares can outperform
• Lynas share price higher following record Q4 sales

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Uber Technologies (NYSE: UBER) popped on Tuesday after the ridesharing and food delivery giant reported strong second-quarter growth metrics. As of 3:25 p.m. ET, Uber’s stock price was up more than 18%.

So what

Uber’s gross bookings — essentially, the total dollar value of transactions facilitated by its platform — rose 33% year over year to $29.1 billion. The gains were fueled by a 21% jump in monthly active platform consumers, to 122 million. People are also using Uber’s network more often, which helped to drive a 24% increase in trips, to 1.87 billion.

Uber is benefiting from a recovery in demand for travel-related services. Its airport gross bookings soared 139% and constituted 15% of its total mobility gross bookings, which grew 57% to $13.4 billion. Additionally, demand for food delivery services has remained strong during the pandemic. In turn, Uber’s delivery gross bookings increased 12% to $13.9 billion. 

Still, Uber generated a net loss of $2.6 billion, due in part to the reduced valuations of its equity investments in self-driving vehicle start-up Aurora, Singapore-based ridesharing leader Grab, and India-based food delivery company Zomato. 

However, Uber’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved to $364 million from a loss of $509 million in the year-ago period. Uber also produced free cash flow for the first time, to the tune of $382 million.

“We became a free cash flow generator in Q2, as we continued to scale our asset-light platform, and we will continue to build on that momentum,” Chief Financial Officer Nelson Chai said in a press release. “This marks a new phase for Uber, self-funding future growth with disciplined capital allocation, while maximizing long-term returns for shareholders.”

Now what

Somewhat counterintuitively, inflation appears to be prompting more drivers to join Uber’s platform. Although higher gas and vehicle prices can cut into drivers’ profits, rising grocery and other living costs are leading more people to work to earn money by driving for Uber. 

All told, the number of new driver sign-ups in the U.S. surged 76% compared with the prior-year period. Better still, drivers and couriers earned a combined $10.8 billion during the second quarter, which represented year-over-year growth of 37%. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why did the Uber share price surge 18% today? appeared first on The Motley Fool Australia.

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• ‘Essential foundation for success’: Lynas share price leaps on $500 million expansion
• Is the Magellan share price a buy for its big dividend yield?
• WAM Leaders share price rises on record year and dividend boost
• ‘Unlocks hidden value’: Rio Tinto share price slides despite $525 million payday
• Here’s what I consider to be the very best ASX 200 share to buy in August

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Uber Technologies. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Magellan Financial Group Ltd (ASX: MFG) share price has been one of the worst performers in the S&P/ASX 200 Index (ASX: XJO). Over the past year, it has fallen a massive 71%. Ouch.

But, with big falls in the share price, the Magellan dividend yield has been boosted. However, it must also be said that the dividend is likely to fall in dollar terms because of the drop in Magellan’s funds under management (FUM) and the subsequent effect on profit.

But before we get to that, I must admit that I recently sold my own Magellan shares. The fall of the Magellan share price has been very disappointing, but it wasn’t the reason I sold my holding.

The key attraction about Magellan to me was its Magellan Capital Partners segment making investments into operating businesses like Guzman y Gomez (GYG). The long-term growth potential and diversification of that segment was appealing. However, Magellan recently decided it’s going to focus on its funds management business, so it sold its GYG stake. Whether Magellan shares were up or down, I would have decided to sell because the key reason why I invested was being dropped.

Magellan dividend expectations

The fund manager has committed to a high dividend payout ratio. So, at this lower Magellan share price, it represents a large dividend yield.

CMC Markets has an estimate of 105.9 cents per share for the annual dividend per share in FY23. Excluding the effect of franking credits, that would be a forward yield of 7.1%. Including franking credits, the yield would be more than 9%.

Just to reiterate, that dividend estimate would still represent a huge dividend cut compared to FY21.

Should investors buy for the income?

The difficulty is knowing what’s going to happen next.

At the moment, there is an ongoing heavy outflow of funds from Magellan’s business. The amount of FUM Magellan has is a key revenue and profit generator for the business. The loss of FUM is a major factor in why investors (including brokers) now think the business is worth less than before.

In FY24, profit is expected to decline again, leading the annual dividend to drop to just 87.1 cents according to the estimate on CMC Markets.

Will the dividend keep dropping after that? Who knows. Perhaps the leadership and investment team can turn things around. The Magellan share price can act independently of FUM movements.

However, I’m looking for businesses that are capable of growing their underlying profit, value, and dividend for shareholders.

The key thing for Magellan is to start generating some good performance in its key investment funds over longer time periods again. With relatively high fees, what will attract/retain funds if the investment fund is underperforming against its benchmark consistently?

However, I will note that the global equity strategy has delivered short-term outperformance against its benchmark, as at 30 June 2022, over the prior month and three months.

But, I think there are other ASX dividend shares that have the capability of producing more attractive returns and growing the dividend.

The post Is the Magellan share price a buy for its big dividend yield? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The WAM Leaders Ltd (ASX: WLE) share price is up more than 1% after the listed investment company (LIC) revealed its FY22 result which included a record dividend.

In early trading, the WAM Leaders share price rose 1.32% to $1.54 and remains there at the time of writing.

Let’s check the highlights of the company’s results:

WAM Leaders share price higher on record year

• The gross portfolio return was 9.7% in FY22, outperforming the S&P/ASX 200 Accumulation Index (ASX: XJOA) by a record of 16.2%
• Operating net profit after tax (NPAT) of $65.8 million, down from $228.9 million in FY21
• Annual dividend of 8 cents per share, up 14.3% year on year
• Profit reserve of 36.3 cents

An LIC earns profit from the dividends and capital gains (both realised and unrealised) from its portfolio. In other words, if the portfolio goes up $60 million in value over the financial year, then WAM Leaders can report that as a profit. If the portfolio goes down in value, it leads to a loss in the accounts.

The operating profit was lower than last year and the investment return was also lower. But, it beat the index in percentage terms by a record amount.

What happened during FY22?

There was much volatility for the ASX 200 during the last financial year as inflation soared and central banks started rapidly hiking interest rates in a bid to get things under control.

The WAM Leaders Chair Geoff Wilson said the investment team had an “exceptional” year and that during this volatile period, the fund managers outperformed by “dynamically managing the investment portfolio with continuous adjustments to reflect changes to the economic and market conditions”.

In June 2022, WAM Leaders announced it was going to merge with the much smaller Absolute Equity Performance Fund Ltd (ASX: AEG). This acquisition will be paid for in new WAM Leaders shares. The number of shares will depend on a formula based on the ratio of the net tangible assets (NTA) of WAM Leaders before tax, compared to the pre-tax NTA of Absolute Equity Performance Fund.

The WAM Leaders share price fell 4% on the day of the merger news but the ASX 200 also fell by 3.5%, amid heightened volatility for the ASX share market.

What did management say about the performance and the outlook?

Lead portfolio manager of WAM Leaders Matthew Haupt said:

We are pleased to have generated both outperformance, as well as strong absolute investment portfolio performance for our shareholders since inception.

Despite market extremes, both troughs and excesses, our process has generated outperformance well in excess of the market. Currently we are in the midst of a tightening cycle, as central banks navigate between economic growth and inflation.

We welcome periods of uncertainty and volatility, and expect inflection points over the coming year will present further opportunities for our shareholders

What’s next?

The LIC’s investment team will hold a webinar on 8 September to talk about the result.

WAM Leaders’ final dividend will go ex-dividend on 17 November 2022, with the payment due on 30 November 2022.

WAM Leaders share price snapshot

As mentioned, WAM Leaders outperformed its benchmark in FY22.

Over the last month, the WAM Leaders share price has risen by another 4.4%. At the current WAM Leaders valuation, it has a grossed-up dividend yield of 7.4%.

The post WAM Leaders share price rises on record year and dividend boost appeared first on The Motley Fool Australia.

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More reading

• This fund manager just bought more of these 2 ASX 200 blue-chip shares

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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