more on the positioning in a Trump world - interesting video presentation |
monthly fact sheet available, negotiating Trump a prominent theme |
It seems shareholders didn't like their proposals after all, despite having undertaken consultation prior the original announcement!
Update on General Meeting -
The Board of Bellevue Healthcare Trust plc announces that it has decided to withdraw the proposals set out on 2 December to amend the articles of association covering the Redemption Facility.
Prior to putting forward the proposals, the Board undertook a shareholder consultation indicating support for a revision of the Redemption Facility.
Subsequent engagement, alongside changed shareholder feedback, has led the Board to consider that the proposals do not have sufficient support from shareholders. Accordingly, the general meeting will be adjourned indefinitely. |
NAV has been fairly static over the past 12 months, a significant recovery in the healthcare sector is sure to come at some point, a degree of patience is required. |
Unfortunately seems to be stuck in a death spiral. They had to do something. 50% redemptions in 2 years must have had a detrimental effect on the investee companies in an out of favour sector. Not sure the new arrangements are going to be much better particularly if the discount control is perceived to have weakened. Broadening the number of investments is probably a sensible step. But the plain fact is that the manager hasn't produced enough alpha |
Proposed changes to:
~ articles of association to replace Annual Redemption Facility with conditional tender offers and continuation vote;
~ investment policy (increase maximum number of stocks the Company's portfolio can hold from 35 to 45);
~ investment objective/returns objectives
Circular and Notice of General Meeting - |
All rather depressing here. 3 years of share price decline and underpeformance leading to shareholders marching for the exit via the annual redemption offer leaving a trust that has been severely reduced in size. Of their 6 peers in the AIC Biotech & Healthcare sector, only SYNC have performed worse over the past 5 years. The investment managers really need to reverse the fortunes of this trust if it isn't going to wither away completely. |
Monthly Factsheet (Oct 2024) -
Welcome to our October update. The American people have spoken, and with greater clarity than many of us expected. The Donald is back for Act Two and, broadly speaking, Corporate America has little to fear from this as he seeks a pro-growth,
deregulated agenda.
The outlook for international trade is undoubtedly complex, and we hope that we are not headed back to a world of tit-for-tat tariff-making a la Smoot-Hawley, which coincided with a global depression in the early 1930s. This would undoubtedly complicate the outlook.
However, we remain positive on the outlook for US healthcare, and on the SMID companies that dominate our portfolio in particular; a return to wide-scale sectoral M&A in mid-2025 could be a significant catalyst for these companies... |
 Over a third of Bellevue investors head for the cash exit36.3% of shareholders take up the annual redemption offer, reflecting disgruntlement over underperformance in recent years, which will shrink net assets from £741m to £472m.More than a third of Bellevue Healthcare (BBH) shareholders have cashed in their shares in the annual redemption offer, highlighting discontent after a prolonged period of underperformance.A total of 36.3% of investors in the £663m portfolio of global healthcare stocks tendered their shares, marking a huge increase on the annual redemption offer from 14.3% a year ago.In light of this, the fund which is managed by Bellevue Asset Management's Paul Major and Brett Darke will split the portfolio into redemption and continuing pools. The redemption pool price will be based on the 'realisable value of the redemption pool', with the redemption point being 22 November.The continuing pool will continue to reflect the net asset value (NAV) of the fund.Winterflood analyst Shavar Halberstadt said the level of redemptions was 'notable' and a turnaround from when the trust traded at a 'premium for most of its life prior to mid-2022' it now trades on an 8.4% discount. He said the discount was the tightest among its peer group and highlighted the 5.5% yield as being the second-highest in its peer group, with a loss of scale in the portfolio potentially leading to 'wider issues'.Deutsche Numis's Ash Nandi it was 'not surprising to see meaningful redemptions given the company has flagged it was expecting them' bearing in mind the 'disappointing' performance of late. She estimated that the redemption would slash the fund's net assets from £741m to £472m in the continuing pool.Over the past three years, the fund has seen NAV decline 8.8% versus a 27.4% increase in the MSCI World Healthcare index due to its concentrated portfolio with a bias to small and mid-caps.'It will be interesting to see how swiftly the redemption pool can be liquidated, and what price impact there is on underlying holdings of BBH Healthcare selling, given that for some portfolio companies, BBH Healthcare represents a meaningful portion of share capital,' Nandi said.While the portfolio is concentrated, returns on winning stocks can be huge, with shares in CareDx, the diagnostic surveillance company for heart transplant recipients, the largest holding at 7.6%, soaring 169% this year. Citywire editor Gavin Lumsden tipped the trust, pointing out that increased healthcare spending as populations age or grow wealthier will remain a continual driver of returns, while falling interest rates should improve sentiment towards the unloved sector. |
any underperformance is punished eg this trust and Miton Microcap both suffering very large redemption requests, think they're paying the price for having missed out on the GLP1 story thus far.
their top ten suffered some heavy falls today.... |
Hmm, that is no vote of confidence in the manager |
Wow! If I understand this correctly, it looks like BBH is going to be shrinking considerably after Redemption Requests were received for more than 36% of the company's issued share capital!
Update on Redemption Process -
As per its announcement on 30 July 2024, the Company has a redemption facility through which shareholders are entitled to request the redemption of all or part of their holding of ordinary shares on an annual basis.
The total number of ordinary shares as of the record date, in respect of which Redemption Requests were received for the 22 November 2024 Redemption Point was 163,834,887 (representing 36.34% of the Company's issued share capital (excluding treasury shares)).
The Directors have decided to calculate the Redemption Price by reference to the amount generated upon the realisation of a Redemption Pool created for the purpose of funding the redemption. Hence the portfolio will be split into a Redemption Pool and a Continuing Pool from the close of business today. Daily Net Asset Value announcements published from tomorrow will reflect the Continuing Pool.
The Board has engaged a third party to undertake sanctions checking and continues to validate all redemption requests received.
A further announcement will be made by the Company for the redeeming shareholders shortly after the 2024 Redemption Point setting out the redemption details. |
After a lean time Bellevue Healthcare looks ready to deliver fat returns -
This article was first published in The Telegraph’s Questor column today... |
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. |
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.' |
"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... |
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. |
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. |
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. |
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 |
Out at 142 after losing 20% in 2 yrs. Good luck holders. |
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 |
Some interesting discussion on BBH and their looming annual voluntary redemption offer in the latest Money Makers podcast...
From 49m18s to 53m22s |
9% discount now, against steady premium for a long time. |
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