Edinburgh Worldwide Investment Trust, managed by Douglas Brodie (pictured), has announced its annual results for the year ended 31 October 2015. During the year the company’s NAV by 10.0% and its share price by 13.8% beating its comparative index, the S&P Global Small Cap Index, which increased by 3.5% in sterling terms. The Company says its financial year can be split into two distinct halves, with the first showing notable strength in returns followed by a second half where the Company retraced some absolute but not relative performance, following the market setback in August.
In terms of performance, the company says that its healthcare holdings contributed strongly to performance and that encouraging clinical trial data was well received for two of our European biotechnology companies, Galapagos and Genmab. With regard to Genmab the company has, sice the trust’s year-end, received approval for its first-to- market antibody treatment for multiple myeloma. Whilst still at an early stage, the managers say that they are highly encouraged by the progress made by the French biotechnology company Cellectis. They consider that the company has a well differentiated offering in the field of cell-based cancer treatment which they say feeds heavily off its expertise in gene editing. 4D Pharma has also identified novel bacteria with a range of potential therapeutic applications.
MarketAxess, the US based electronic bond trading platform also provided a strong contribution. The managers say that they believe that a combination of increasing regulatory pressure and a desire to access liquidity will continue to push bond investors towards the MarketAxess platform and, in time, they think the company can broaden out geographically and into alternative investment instruments.
In terms of detractors, Stratasys suffered following a reduction its shorter term earnings guidance as an increased level of investment in the business has coincided with weak demand for 3D printers. The managers say that they are closely watching how the industry develops and there belief is that structural growth will prevail given the extent to which automation and additive manufacturing techniques are likely to transform how many products are made.
In terms of portfolio activity, the acquired a number of new holdings in the period including positions in two unlisted companies, Oxford Nanopore Technologies and Souq.
Oxford Nanopore is developing a system for direct and exquisitely sensitive electronic analysis of single molecules in real time. The managers say that they are excited by the progress Oxford Nanopore has made at applying its technology in the area of DNA sequencing where we feel the inherent advantages of their approach begin to open up sequencing to a much larger market opportunity than is currently the case. Souq operates Souq.com, an online market place that is one of the most popular websites in the Middle East. The managers say that they are attracted to the broad e-commerce opportunity that Souq offers driven in part by what they see as the favourable wealth and population demographics within its key markets.
In terms of new listed holdings, the company has added Grubhub, an online food ordering and delivery service for take-away restaurants in the US, Puretech, a healthcare-focused holding company with strong links to many leading, and Wayfair, a homeware and furniture focused e-commerce company.
In terms of outlook, the company says that the economic backdrop is one of uncertainty and polarisation between economies that are growing and those that are struggling to do so. This mixed global picture is resulting in periods of notable market volatility from which very few companies are sheltered. They say that the Immature, innovative, fast-growing businesses that the trust seeks to identify are not immune from exhibiting such price volatility. However, the Board and Managers believe that business fundamentals ultimately prevail over the investment cycle. Successful smaller companies create and exploit their own long term opportunities despite the economic conditions at any given time.
Edinburgh Worldwide benefits from strong healthcare performance : EWI