Bellevue Healthcare Share Discussion Threads

[rambutan2] 08/12/2022 22:35

Only December left:

[jonwig] 11/11/2022 07:20

Kepler Trust Intelligence research note (FOC, not independent):

[rambutan2] 05/11/2022 21:53

Re redemption, from the latest monthly:

October sees the opening of the Trusts annual redemption window. This closed on 2nd November 2022. We have offered this ungated facility, which allows investors to redeem shares at a valuation close to NAV, since inception. In previous years, the take-up has been de- minimis and we have been able to place the redeemed shares in the market rather than cancel them or hold them in treasury.

This year has seen a much higher take up for redemptions than in prior periods, with some 30.6 million shares tendered (5.2% of the outstanding capital). We have received some feedback from several larger wealth managers that they are centrally reducing exposure to investment trust products more broadly in order to have improved daily liquidity and this may have played a role in the larger redemption amount.

We would remind our readers that there is an open-ended UCITS version of the strategy (the WS Bellevue Healthcare Fund) if you are needing to reduce investment trust holdings but still want to retain exposure to the same underlying investments. Unlike the Trust, the Fund does not pay a dividend. Depending on each reader’s situation, there may be other suitability factors that need to be taken into account and it may be necessary to take independent financial advice.

It is very unlikely that such a sizeable redemption amount can be placed into the market and so these shares will in effect be bought in. However, the liquidity of the underlying portfolio is such that we can easily manage to realise the cash without the need to create a redemption pool.

Your managers remain convinced of the long-term opportunity for the portfolio and, as has been the case throughout the year, continuing to add to their personal holdings in the Trust.

[jonwig] 07/10/2022 16:27

betman - nor am I! Usually, such redemptions are made at NAV rather than "dealing price".

[betman] 07/10/2022 14:13

The recent announcement on Voluntary redemption of shares (4/10/22). I am not entirely clear on what the difference is between voluntary redemption through this scheme and selling in the market. The redemption scheme is at an unknown price vs selling in the market at a fixed price. There seems to be a suggestion that redemption is subject to income tax ( on the profit )and market selling is subject to CGT

[rambutan2] 06/10/2022 21:53

Agree, a bit too much verbiage sometimes. Although much prefer to suffer that on a fact sheet rather than just a few updated numbers and no commentary at all.

[jonwig] 06/10/2022 07:59

Thanks! I'd skipped that page in frustration.

[rambutan2] 05/10/2022 22:59

Justification jonwig:

"At this point, regular readers might be wondering why we have elected to include a section on the UK market. The reason is this: the liquidation of portfolios (“put me in cash, preferably dollars”) sinks all ships and has manifested itself in disorderly sell-off. Another attendant (inevitable?) consequence is that many Investment Trusts have fallen onto greater discounts.

This will often have nothing to do with the quality of the underlying investments; when there are more sellers than buyers, equity prices fall. There is value out there to be sure, but people are shell-shocked and it will likely take a bit of time before we see any meaningful (and careful) dip-buying.

Data from JP Morgan, who are one of the Trust’s brokers, suggests that the average discount across the UK Investment Trust sector increased from ~13% at the end of August to closer to 16% at the end of September, and this compares to around 5% at the beginning of 2022. We too have seen an escalation in the discount on Bellevue Healthcare over the month (5.7% as of the end of September), having traded at an average premium of 0.5% from inception to the end of 2021.

What might the managers be able to do about these discounts? Share buybacks by Trusts are one option. In reality, these must be conducted on an arm’s length basis and in a manner that does not distort trading. As such, it will seldom have a material impact – the Trust would simply furnish sellers with liquidity and diminish the capital the manager has available to buy cheap assets on behalf of the remaining shareholders. This feels rather unfair, especially when there are some compelling opportunities within the scope of the wider investment environment.

It is deeply frustrating to say so, but we probably need to resign ourselves to higher discounts persisting as a wider phenomenon in the Trust sector until broader confidence in the UK stock market is restored. This will be a function of asset prices being deemed to have fallen far enough or some sort of profound change in the economic outlook for the country.

In this context, we think the best thing a domestic investor can do in the short-term is to focus on under-valued UK-listed equities that are de-coupled from the UK economy and sterling. A global healthcare-focused Investment Trust for example."

[jonwig] 05/10/2022 17:52

It's good knockabout fun, I suppose. But related articles in the FT recently are a lot more trenchant.

And it's page 4 before they actually get talking about healthcare. Why the comments specifically about the UK economy when it's zero pc of the portfolio? (US 95%.)

[rambutan2] 07/9/2022 16:15

Monthly views:

[xtrmntr] 12/8/2022 21:08

The managers of investment trust Bellevue Healthcare are confident the future of the global healthcare industry is a bright one. Ageing populations across the world and the exponential growth in chronic illnesses mean demand for healthcare services is here to stay, irrespective of any economic downturn. So confident are the management team that since the start of the year, they have used £80million of low-cost borrowings to increase the trust's holdings in equity markets. The two individuals overseeing the £1billion portfolio – Paul Major and Brett Darke – have also been busy buying more personal shares in the trust, a sure-fire sign that they believe the outlook is more positive than negative.'Of course, as an investor in equities, you can't dismiss the Putin factor,' says Major, 'Or for that matter, geopolitical tensions in the South China Sea. ''It explains why we have kept some powder dry just in case something happens which causes share prices to plunge sharply and suddenly. If that happened, we would use the borrowings we have yet to employ to buy even more shares in the companies we own. 'The fact remains that many of the companies we invest in are super-resilient businesses that will keep on growing. They provide a degree of certainty in an uncertain world. The trust is invested in 29 healthcare stocks, most listed in the United States. 'We keep an eye on some 250 companies,' says Major. 'Most are small to medium-sized businesses doing extraordinary things in the healthcare sector. But their share prices have been hit by the general slide in US equity values over the past nine months.' Bellevue's numbers confirm this. Over the past year, the trust has recorded losses of nearly 9 per cent. This compares with five-year gains of 73 per cent. 'Our job is to find companies that can deliver healthcare solutions, whether it is in disease prevention, diagnosis, treatment or recovery,' says Major. Among the trust's top 10 holdings is CareDx, a US company that provides at-home testing kits to people who have had a major organ transplant. 'The tests help reduce the risk of organ rejection,' says Major. 'They are able to identify any adverse impact on the replacement organ as a result of the drugs being used – and any weakening of the immune system that could trigger other conditions.' The investment trust has had a holding in CareDx on and off over the years, but reinvested in the company in September last year. Another big fund stake is in Axonics, a business that has developed a small electronic implant that helps people who suffer from involuntary leakage of the bladder or bowel. The implant sends out a current that stimulates nerves that control the bladder and bowel, stopping leakage. When someone wants to use the toilet, they deactivate the implant through a hand-held switch. Quarterly financial results for Axonics, released last week, showed a 50 per cent increase in company revenues, compared to the same period last year. The trust has a stock market identification code of BZCNLL9 and a ticker of BBH. Annual charges total 1.1 per cent. Given its specialist nature, it is a fund that should only form a small part of an investor's portfolio. One attractive feature is that it pays a regular dividend, equivalent to around 3.5 per cent per annum. The latest interim dividend of 3.235pence compares to last year's payment of 3.015pence and a share price of £1.74.

[rambutan2] 07/8/2022 22:34

LOL:

Welcome to our July jocundity. The schools are out and the sun is shining. Thank goodness it’s holiday season, because nothing works: there aren’t enough staff at the airports (and it can take an age to renew your passport), ambulances and GP appointments vie with unicorns for rarity, there isn’t enough water for the garden and the price of everything rises literally before our eyes. At least the rolling blackouts haven’t yet started.

Where will it end? Worry not, for the Truss/Sunak brains trust will shortly carry us into the sunny uplands. Decades of chronic under-investment and poor planning will fall away in mere weeks and before you know it, we’ll be saved. If not, “no idea Keir” or whatshisface from the other lot whose name we cannot recall will suddenly have some policies. It’s all good; Thomas Hobson be damned.

For those desperate for good news, the stock market has recently began to offer some cheer. Perhaps we are finding a bottom. Sentiment certainly seems to have reached that point where few investors are expecting positive news. However, we continue to see opportunity and that is an exciting distraction from the chaos of everyday reality in basket-case UK.

[speedsgh] 29/7/2022 13:55

Bellevue backs dental stock to make investors smile again - https://citywire.com/investment-trust-insider/news/bellevue-backs-dental-stock-to-make-investors-smile-again/a2392334

[rambutan2] 07/7/2022 22:02

Also, interims to 31 May released:

[rambutan2] 07/7/2022 21:59

June, perhaps the turning point month:

[ram376s] 04/7/2022 10:24

Covid share gdr. ripe ,

[speedsgh] 09/6/2022 08:22

Thanks @rambutan. A great read as always.

"Finally, it bears repeating that we see no macro-economic or regulatory reason to have a less positive view on the dynamics of the global healthcare market today than we had six or twelve months ago. Our companies operate in an environment where demand is largely inelastic and is set to continue to rise due to the twin demographic drivers of a rising and concurrently ageing global population, allied to the expansion of the available treatment options through continued progress in biomedical research and product development.

Because demand is inelastic, they have considerable pricing power to pass on rising costs and generally already have high gross margins so non-labour input costs are only a small driver of the resultant operating margin. Again, we see no reason why these longstanding ‘defensiveR17; attributes of healthcare have changed in the recent past or why they are likely to change in the future. If you are worried about consumption patterns and inflation or stagflation then we believe that you cannot do much better than to own healthcare assets.

Finally, there is no reason why one should think these attributes are stronger for large companies than small ones. The only difference is that a broader product portfolio gives you lower systematic product-specific volatility in sales and earnings. Healthcare is healthcare at the end of the day.

Forget the creams and pick away!
Hindsight is the worst form of wisdom, since we cannot do very much about the past. As a consequence, we must accept that we are where we are in terms of our relative and absolute performance since H2 2021. We noted last month how we regularly review the portfolio from the perspective of a clean sheet of paper. We reiterate again that, looking forward on any objective measure, this is a collection of very cheap,
high quality growth assets and hope that the previous analyses offer some additional colour as to why we are so convinced this is the case.

Russia’s war against Ukraine and the lack of any obvious strategic objective that could enable an early resolution of it clearly complicates any long-term analysis of the broader economic and geo-political outlook. China’s zero-COVID nonsense is a further cloud on the economic outlook and again is one where an early resolution (i.e. capitulation) seems fanciful.

We are not so blinkered as to not recognise the risk that markets could yet fall further and that not everyone has the appetite to take on more short-term risk because the longer-term opportunity seems so incredibly compelling. We do though, and your managers have again added to their overall personal holdings in the Trust during May."

[rambutan2] 08/6/2022 22:04

Manager's monthly musings:

[jonwig] 26/5/2022 06:51

dlp - the asset managers in their monthly factsheets believe the shares are seriously undervalued, and make a good case for that. It's not as though BBH are the only one in the sector suffering! See link in #92.

[dlp6666] 25/5/2022 21:36

I'm holding this as a diversified way to gain income in what seemed to be reasonable growth area.

Do other holders think BBH will come good, or is it time to ditch?

Thanks

[chc15] 09/5/2022 15:41

I think May might be worse, what a tumble!

[rambutan2] 05/5/2022 21:09

Telling it how it was:

"April 2022 will be seared into our memories for all the wrong reasons. With the Trust’s net asset value declining 10.4% to 164.5p; it is in our top three worst months for absolute performance and stands alone as our worst ever month for relative performance; we under-performed the index by 10.4% over the month, despite FX being a material tailwind (+430bp)."

[rambutan2] 29/4/2022 16:06

March factsheet:

[speedsgh] 28/3/2022 07:25

Fairly extensive sector article on IC website...

Can tech save healthcare? -