Polar Capital Global Healthcare interim results for the six months ended 31 March 2015 show the company’s net asset value total return was 19.1%, a good result but unfortunately 2.6% behind the MSCI All Countries World Index Healthcare Index. What’s more, the discount widened from 5.4% to 9.8% so the return to shareholders was even more off the mark. Two quarterly dividends of 0.6p were declared (last year the figure was 1.1p for the whole six months).
The Chairman’s statement says the company has a structural underweight to biotechnology and this accounts for the fund’s underperformance – the NASDAQ Biotech Index was up 34.7% over the six month period.
The Board is already thinking about what may happen in 2018 when the fund is due to wind up and is considering offering a rollover option to investors as well as a cash exit.
The investment managers’ report says the major contributors to portfolio performance during the reporting period were Bristol-Myers, Eli Lilly, Novartis and Pfizer. They says the share price moves in Bristol-Myers, Eli Lilly and Novartis reflect the increased investor enthusiasm for drug pipelines and the perception that R&D productivity is improving at certain companies. All three companies made positive progress in their respective R&D pipelines during the reporting period. Pfizer’s share price was a particularly strong performer over the reporting period as it became apparent that the company would not pursue an acquisition of AstraZeneca.
On a relative basis, Sanofi was the most significant underperformer compared to the large pharmaceutical peer group over the reporting period to the end of March. The stock was a particularly poor performer in the latter part of calendar 2014. The company has been facing pricing pressure in its diabetes business and had a series of disappointing earnings announcements over the course of 2014. This culminated in the board firing the CEO at the end of October.
PCGH : Polar Capital Global Healthcare thinking about its long term future