Respected fund manager Wilson Asset Management (WAM) has recently identified two promising 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 11.2% per annum since inception in January 2008, which is superior to the Bloomberg AusBond Bank Bill Index return per annum of 2.8%.
These are the two ASX shares that WAM outlined in its most recent monthly update:
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Champion Iron Ltd (ASX: CIA)
This is a mining business which is headquartered in Canada.
Champion Iron is described as a premium iron ore miner exploring the Bloom Lake and Fire Lake projects in the Canadian province of Quebec.
Last month, Champion Iron announced in its third quarter update that its growth project 'Phase II' remains on track for an April completion.
The ASX share has announced its dividend of C$0.10 per share. It also continues to invest for growth as well.
Champion Iron has increased its leverage to higher iron ore prices. It's progressing growth projects which are expected to double product output this year.
WAM is still bullish on the business and expects "considerable" free cash flow will be generated by the completion of the 'Phase II' project.
Life360 Inc (ASX: 360)
The fund manager describes Life360 as a business which provides a family safety platform that allows parents to track the whereabouts of their children. It has over 33 million users globally.
WAM said the initial catalyst for the investment was the appointment of Randi Zuckerberg, the sister of Meta (Facebook) founder, CEO and Chair Mark Zuckerberg.
In January 2022, Life360 provided an update for the quarter for the three months to December 2021. This showed the third consecutive quarter of record subscribers, which led to a 62% increase in revenue growth. It beat previous company guidance.
The fund manager also noted that the ASX share completed the acquisition of Bluetooth tracking device company Tile in January 2022. The holiday period trading was tracking to plan.
This environment of rising bond yields and the rotation out of higher growth shares has impacted some share prices, so WAM has "managed" the position size accordingly.
Life360 and its underlying business model are "strengthening" according to the fund manager, with the acquisition of Tile causing the company to emerge as a global leader in location tracking services. WAM says the outlook remains positive.
The investment team believe that a potential dual-listing in the US remains a key catalyst for the company.
