Bellevue Healthcare Share Discussion Threads

[alter ego] 14/3/2024 15:12

I struggled to find out when the dividend will be paid and when it goes ex div. BBH Corporate Calendar didn't say so I contacted IR. Ex Div on 9 May, paid on 31 May. Apparently it's on page 78 of the Annual Report. I've suggested they might make it a bit more visible and they said yes, they would look at that.

[xtrmntr] 12/3/2024 19:28

Bellevue Healthcare (BBH) has extended its run of underperformance, with its bias towards small- and mid-cap stocks meaning it has now lagged its benchmark since inception in 2016.The 'classical defensive attributes' of the healthcare sector failed to entice investors for yet another year, said Paul Major, who manages the £699m fund with Brett Darke.The MSCI World Healthcare index fell 1.8% in 2023, underperforming the MSCI World index by 14.8%, which Major said was 'almost a mirror image of what happened in full-year 2022' and marked 'the worst relative annualised performance over this period in the 23 years'.As investors shunned healthcare despite the economic woes faced by markets, the investment trust saw its net asset value (NAV) sink 12.7% in the year ended 30 November 2023 versus a 7.1% slide in the MSCI World Healthcare benchmark. This has challenged the fund's track record, and since inception in December 2016, NAV total returns are now 103% versus 127% for the benchmark.Major said the fall in the year to 30 November was due to several factors, including larger companies not being as defensive as hoped for as mega-cap bellwethers Pfizer and Sanofi cut earnings forecasts. There was also the 'nebulous perception' of research and development disappointments and a lack of mergers and acquisitions.The 'outsize' factor contributing to underperformance over the year was the fund's bias towards smaller companies as the 'past few years have seen investors hiding in the relative safe haven of larger, more liquid and typically more diversified companies'.'Such companies tend to be older and more mature, so less at the mercy of debt and equity markets for additional funding and thus less sensitive to interest rates,' said Major.'They are also easier to exit if the market does look like it is going down and investors wish to reduce equity exposures.'Major added that the 'compression' seen in small- and mid-cap healthcare stocks was 'far beyond anything that could be justified' and the positive trajectory of the same stocks in December 2023 and January 2024 – after the end of the results period – 'attests to the arbitrary and egregious nature of the devaluation that investors have witnessed over the past two years'.To back up his point, Major doubled down on his allocation to smaller companies, ending the year with 3% less exposure to mega- and large-cap companies and increasing at the other end of the size spectrum.The already large exposure to the US was also increased and now sits at 95%, as Major exited Europe and 'rest of world'. And valuations in China continued to experience 'significant pressure' due to a lacklustre post-Covid recovery and overhang from an anti-corruption drive.The portfolio started the year with 29 positions and ended with 27 after five additions and seven exits in another low turnover year.One holding Major reduced mid-year was Apellis Pharmaceuticals as the shares reached fair value but shortly after it slumped more than 70% 'on concerns about side effects for its key drug Syfovre (an eye injection used to treat geographic atrophy)'. 'We felt this was an overreaction so we scaled up the position and rode the recovery to considerable profit,' he said. 'We have since been taking profits again.'Major added that the market has been 'prone to overreactions on the downside' in the past two years and said last summer was marked by the 'frenzy' around the use of GLP-1 obesity drugs that gripped the market and divided healthcare stocks into 'a perceived binary grouping of obesity winners and losers'.In a bid to take advantage of these mispricings in the market, Major has been increasing allocation to tools, healthcare IT and healthcare technology, while reducing exposure to diversified therapeutics.The trust has enjoyed some respite from underperformance since the financial year-end, with the shares up nearly 9% in the past three months, in line with the index but ahead of the underlying 6.9% rise in the portfolio. That's left the shares standing 5.1% below net asset value, narrower than their 7% one-year average discount.He remained committed to investing in 'healthcare change' and said the current model is 'neither scalable nor financially sound' enough to deal with an ageing population and the demand for better products for more people.'If we cannot bend the cost curve and change the delivery paradigm, the services will need to be cut or the system will go bankrupt. Ergo, healthcare must change,' he said. 'There is no alternative.'

[takeiteasy] 06/3/2024 14:36

"As touched on above, this year has not been smooth sailing..."

Some very strange selections not to have for example Eli lilly and Novo nordisk - when there is a stampede on for some products why not at least have some of these weight loss drugs titans on board - you end up with so much tracking error.

Is there risk management in place that a stock drops x% it is taken from the portfolio - question. I would like to know. 3 stocks down over 54% from this report.

Wdik of course - but a shame as I think this has some real potential.

Dyor and no advice...

[speedsgh] 04/3/2024 20:31

Annual Financial Report -

Recent trading and outlook

In these fast moving and macro-oriented times, we continue to recommend that investors rely upon the detailed and discursive monthly factsheets for an up-to-date view of the outlook. These can be found on the Company's website1. We are pleased to report that the Company's performance in the three months to the end of February 2024 has been positive on a relative and absolute basis and the macroeconomic situation is coalescing around a more constructive, narrower range of outcomes, even if the geopolitical circumstances remain febrile.

It bears repeating that our strategy of investing in `healthcare change' remains a powerful and compelling one. Healthcare continues to be the secular growth story of our age. Recession or not, there are ever more people and they are ageing. More and more countries are becoming developed economies and scientific progress continues to open up new avenues to relieve the burden of human suffering, raising expectations of what products and services will be available to this ever-greater number of people.

However, society needs to pay for all of this and the current model is neither easily scalable nor financially sound. If we cannot bend the cost curve and change the delivery paradigm, the services will need to be cut or the system will go bankrupt. Ergo, healthcare must change. There is no alternative. We have already seen profound changes implemented since the pandemic. The tools, products and services that are enabling the re-imagining of healthcare can be accessed through the public equity realm, creating a persuasive investment opportunity. The past few years may have been very challenging, but the fundamentals remain very attractive.

[speedsgh] 13/2/2024 15:45

Bellevue Healthcare Trust update with Doceo -

... Brett Darke, co-manager of the Bellevue Healthcare Trust, explains why the team believe that now is a compelling time to be seeking opportunities in the mid cap healthcare space. Darke observes that, although valuations have fallen to new lows, the market expectations for portfolio company revenues remain unchanged. While interest rates do play a meaningful role in performance, Darke points to history to explain that it is possible to invest in mid cap healthcare growth stocks in a tightening rate environment.

[speedsgh] 12/1/2024 11:22

Target dividend of 5.02p for FYE 30/11/24 (2.52p interim payable Aug/Sept 24; 2.52p final payable Mar/Apr 25). Reduction of 15.9% on 5.99p for FYE 30/11/23...

Target Total Dividend -

2.995p final payment for FYE 30/11/23 (not yet officially declared) to be paid Mar/Apr 24.

[takeiteasy] 22/12/2023 06:23

Coming back to the quality end of the listed space. As we have noted in
previous factsheets, the only way to back-solve for the de-rating that
we have seen across our portfolio would be to apply double-digit
discount rates to everything, with some companies well into the teens.
Yields on 30-year US Treasuries have risen ~300bp over the past two
years (from ~200bp to ~500bp at the end of October), which is simply
not enough to explain the de-rating we have seen.

Indeed, this must imply a very material increase in the ‘equity risk
premium’ for healthcare stocks. Investors need to decide for
themselves whether or not a material increase in the ERP is justified. If it
isn’t, and if you agree with the first point that the fundamentals of
healthcare have not changed, then the patient investor should be piling
into these de-rated small and mid-cap healthcare companies.

A quote from the BBH monthly fact sheet recently out - perhaps one of the more incisive commentaries of the state of the markets and biotech more specifically.

It has been a dreadful few years as the last post confirms - things have got so bad that there is little expectation for a decent recovery..so are getting lower rates now (UST 30 year is now 4% and not 5% as noted above) and hopes of a soft landing in US in 2024..will that be enough to start things off..

dyor and no advice intended etc

www.bellevuehealthcaretrust.com/uk-en/private/insights/bellevue-healthcare-trust-on-the-worst-relative-performance-for-healthcare-in-30-years
Bellevue Healthcare Trust PLC portfolio manager Paul Major speaks to Proactive's Thomas Warner about what he calls "the strangest year" in his career and "the worst relative performance for healthcare in 30 years." 19.12.2023 - Paul Major

[wad collector] 14/12/2023 17:18

Out at 142 after losing 20% in 2 yrs. Good luck holders.

[speedsgh] 10/11/2023 13:45

The latest factsheet contains an empassioned defence of BBH's strategy amid the continued underperformance of the trust. I have to say that I agree with the managers' analysis of the reasons for the underperformance... or is that just my confirmation bias? Time will tell but I suspect that in the goodness of time the current share price will be viewed as having been an excellent opportunity. I have acted accordingly. AIMHO

[speedsgh] 02/11/2023 15:23

Some interesting discussion on BBH and their looming annual voluntary redemption offer in the latest Money Makers podcast...



From 49m18s to 53m22s

[jonwig] 04/10/2023 07:01

9% discount now, against steady premium for a long time.

[speedsgh] 28/6/2023 18:20

Healthcare is really where it's at for AI investors, says Bellevue -

[speedsgh] 25/5/2023 18:28

Is it time to buy healthcare? -

The Armenian oil magnate Calouste Gulbenkian was, when confronted with points others believed would hurt his business, fond of issuing a simple retort; “The dogs bark, the caravan moves on.”

It might be easy to dismiss this as flippancy, but given he survived close to 70 years in the oil industry and died the world’s wealthiest man, it’s probably fair to assume he had a good idea of what mattered and what didn’t.

Whether or not we’re quite as astute as Gulbenkian is up for debate, but his favourite retort does come to mind when looking at many listed healthcare companies today. Over the past 18 months, we’ve seen many firms in the sector see substantial drawdowns, albeit after a period of stronger performance that started following the onset of the pandemic.

Some investment trusts that invest in the healthcare industry have managed to weather this storm better than others. However, the average share price total returns for the AIC’s Biotechnology and Healthcare as a whole were negative for the 12 months to 26/04/2023.

Bellevue Healthcare’s (BBH) returns at that time were slightly down in NAV terms, with a fall of 1.7%. The trust’s shares fell further, with a 6.4% drawdown on a total return basis. As that suggests, the trust has seen its discount widen substantially as a result.

Having traded at a 6% premium in May of last year, something that enabled the trust to issue new equity, the trust’s shares are now sitting at a nearly 8% discount to NAV. This is among the lowest levels the trust’s shares have traded at relative to NAV since launch. It is also far below the five-year discount average of 0.2%.

It is easy to see how the events of the last 18 months have made investors feel uneasy. The war in Europe and the highest levels of inflation we’ve seen since the 1970s do not make for the most relaxing of backdrops in which to invest.

But on a macro level; it is hard to see what has changed for the healthcare sector. Reports in January that China’s population is declining for the first time in decades were another reminder that the world is getting older. Readers will know that this is not a new trend.

In 2017, the United Nations published a report noting that the global population of people over 60 had risen to 962m – up from 382m in 1980. The World Health Organisation believes this dynamic is likely to result in a substantial change in the world’s demographics over the next 25 years, with the proportion of people over 60 almost doubling from 12% in 2015 to 22% by 2050.

We can see the impact this is having on healthcare spending. For example, in the UK, total spending on healthcare rose from £78.9bn in 2000 to £222.7bn in 2019, or 5.6% on average annually. GDP rose from £1.62trn to £2.24trn, equivalent to 1.7% per year, over the same period.

More than 80% of that spending normally comes from the state, and a similar picture is evident across the world. As readers can likely infer, this has the potential to create a circular problem. More GDP growth is needed to fund rising healthcare costs. But the lack of spending in other parts of the economy, as well as higher taxes needed to fund those increasing healthcare costs, arguably crimp that growth.

This plays into one of the key themes we see in the BBH portfolio, namely that there are innovative companies attempting to address this problem by providing new solutions to existing healthcare problems.

It also partly explains the company’s recent performance, as these are the sorts of companies that have attracted more investor concern over the past 18 months. Partly that’s because of valuations, but it’s also due to fears that earlier stage firms won’t be able to raise money or make it to profitability.

There are a couple of points that should allay fears here. One is that BBH managers John Major and Brett Darke have repeatedly noted that, even if the discount rate used to value portfolio companies were to rise markedly, they would still think they were fairly valued.

Those are not just idle words, as they have been adding to the portfolio as well as to existing positions over the past 18 months. Both managers have also made substantial additions to their own holdings in BBH during that time.

And in the first quarter of this year, two companies in the portfolio raised money via equity issuance rather than debt. In both instances, the two issuances were oversubscribed, a sign that plenty of institutional investors still believe these companies offer the potential for long-term returns.

That doesn’t mean it’s going to be smooth sailing and that we won’t see further volatility in the near term. But the secular trends described above combined with the managers’ stock picking abilities make it plausible we’ll see returns smooth out over the long-term. Or, as Gulbenkian might have it, the dogs bark, the caravan moves on.

Login to read the full article...

[speedsgh] 02/5/2023 14:40

Trust Watch: Bellevue’s a bargain if you think markets are bonkers -

When markets stop obsessing about interest rates and inflation, trusts like Bellevue Healthcare are going to look extremely cheap...

...Bellevue waits for turnaround

Bellevue Healthcare (BBH), a concentrated, mid-cap focused portfolio run by Paul Major (above) and Brett Darke at Bellevue Asset Management, is recovering from a nasty 7% slide in NAV during last month’s fears of a new banking crisis. The shares are not recovering as quickly as the NAV with the result the discount has gapped out to more than double its one-year average at nearly 11%, giving the stock a lowly -2.1 Z-score.

In a video released via the London Stock Exchange’s regulatory news service, Major said he remained optimistic about prospects, particularly with developments in gene editing, which through companies such as top holding Sarepta Therapeutics could open a new era in medical treatment. In recent months, he said there had been few changes to the 28-stock portfolio, as the managers waited for markets to come to their senses, stop obsessing with macroeconomic issues and focus on company performance instead.

‘The valuation disconnect in the market has been very extreme and leads us to conclude that the exposure we have represents very compelling longer-term prospects. Therefore we’re sticking with our knitting and are very happy with what we’ve got,’ said Major.

Like the Baillie Gifford funds, the past 18 months have been tough for BBH which has seen its three-year returns dwindle to 12.6%. The 62.5% gain over five years looks better but trails its benchmark, the MSCI World Healthcare index, by 18%. There could be quite a turnaround once sentiment improves in the way Major suggests.

[1c3479z] 24/4/2023 19:55

sarepta's dmd up before the authorities FDA etc at the moment for consideration, high risk high reward stock though most expect it to be passed. If so, they may mandate additional safety monitoring once it's on the market.
DMD so relentlessly awful - pressure is on to let the drug through though nothing certain.

[alter ego] 24/4/2023 16:18

v interesting video. Gene therapy is a bit beyond my pay grade but I can see why it could be the answer to many illnesses we cannot treat today.

[speedsgh] 24/4/2023 10:49

Bellevue Healthcare Trust portfolio update -

Investment Manager, Paul Major explains that the stark valuation disconnect in markets has reaffirmed the managers' belief that the holdings are compelling, and that the trust remains well placed to benefit from a normalisation in markets. Paul highlights a core holding, Sarepta Therapeutics, as a company at the forefront of gene therapy making headway in the healthcare space.

[1c3479z] 14/4/2023 20:44

rather underperforming of late including last month after looking at the factsheet which suggests that they should be getting a competitive advantage by meeting management and travelling around the world. Have to hope so, much research might be done at home in the office and via webinars, I would have thought.

[speedsgh] 06/3/2023 11:55

Final Results -

From Chairman's Statement...

PERFORMANCE

Over the financial year, the Company's total NAV return (i.e. including reinvestment of dividends) was -4.1%. In contrast the MSCI World Healthcare total return Index produced a positive total return of 14.1%, representing an underperformance of 18.2% over the year.

This is the second annual report where I have to acknowledge underperformance of the Company against the index and the first where the absolute total return was negative. As per last year, I will refer readers to the longer term track record. However, this is not to minimise any potential concerns that investors may have; I will seek to address those below.

Nevertheless, some of my comments from last year's statement bear repeating in what has remained a challenging macro environment for active equity managers: "Short term variations should never change an investment process"; the "Investment Manager remains true to its investment process" and "continues to focus on bottom-up fundamental analysis to drive stock selection predicated on superior long-term returns."

-------------------------------------

DIVIDEND

The Company targets an annual dividend of 3.5% of preceding year-end NAV, paid out in two equal instalments. The Company paid out a final dividend of 3.015p in respect of the year 2021, in April 2022 and an interim dividend of 3.235p in respect of the financial year 2022 in September 2022.

The Board has proposed a final dividend of 3.235p per Ordinary Share in respect of the financial year 2022 and, if approved at the forthcoming Annual General Meeting, this will be paid to Shareholders in May 2023.

For the financial year 2023, the Board is proposing a total dividend of 5.990p per Ordinary Share, composed of interim and final dividends of 2.995p per Ordinary Share, to be paid in August 2023 and April 2024 respectively, subject to shareholder approval. This will be the first year that the Company's dividend pay-out will be reduced, reflecting the lower year-end NAV.

-------------------------------------

Final dividend of 3.235p to be paid on 5 May 2023 (to Shareholders on the register at the close of business on 17 March 2023), subject to Shareholder approval at the 2023 AGM.

[rambutan2] 02/2/2023 15:24

Jan monthly - includes home truths re NHS:

[xtrmntr] 23/12/2022 16:44

https://www.proactiveinvestors.co.uk/companies/news/1002093/bellevue-healthcare-trust-expects-incredible-volte-face-to-be-a-key-factor-in-2023-1002093.html

[speedsgh] 21/12/2022 15:45

5.99p target full year dividend for FY23...

Target total dividend -

... For the financial year ending 30 November 2023, the target total dividend will be 5.99p per ordinary share, this being 3.5 per cent of the unaudited net asset value per ordinary share of 171.16p per ordinary share (including current financial year revenue items) as at 30 November 2022. The Board intends to declare an interim dividend of 2.995p per ordinary share, being half of the target total dividend for the financial year ending 30 November 2023, in July 2023 and intends to pay this dividend in August / September 2023. The Board intends to propose a final dividend of 2.995p per ordinary share for the financial year ending 30 November 2023, in February / March 2024 and intends to pay this dividend in March / April 2024.

The Company pays dividends from a combination of available net income during the financial year and other distributable reserves. It is currently anticipated that most of the target dividend for the financial year ending 30 November 2023 will be financed from other distributable reserves of the Company. This announcement of a target dividend for the financial year ending 30 November 2023 should not be taken to imply a profit forecast by the Company.

[speedsgh] 14/12/2022 14:43

Bellevue’s Major: ‘I feel really confident,’ about oversold healthcare (9/12) -

[jonwig] 10/12/2022 17:27

Review of BBH and sector: