Edinburgh Worldwide Investment Trust has published results for the six months to 30 April 2016. Over the six month period the company’s net asset value per share increased by 0.9% while the comparative index (the S&P Global Smaller Companies Index) increased by 5.6%. The share price rose by 1.2%. Revenue losses per share were 0.35p (six months to 30 April 2015: losses of 0.31p) and no interim dividend is being recommended.
Positive contributions were made from several of the Trust’s larger positions. MarketAxess, an electronic bond trading platform, continued to take an increasing amount of share in the trading of US investment grade bonds and they say they are encouraged that the business is beginning to broaden its platform into other illiquid asset classes such as high yield, municipal bonds and emerging market debt. They sense that the network effects are really starting to build to the advantage of MarketAxess and they are intrigued by the possibility that an efficient bond trading platform might provide a mechanism to increase overall bond volumes in the secondary market; a development which could significantly increase the addressable opportunity for MarketAxess. Tesla unveiled its Model 3 electric vehicle to the world and has already taken approaching 400,000 pre-orders. With a base price expected to be around $35,000, the Model 3 is Tesla’s opening shot in the electrification of mass market vehicles. The aura that Tesla has created with its premium, technology-laden Model S and X cars clearly resonates with a broad audience and the strength of the pre-orders effectively destroys the negative argument that consumers are not accepting of fully electric vehicles. The investment case with Tesla is morphing from one based on pioneering a disruptive product to one where scalability, manufacturing excellence and the company’s vertically integrated approach will be key determinants of future success; the challenge is evolving but they feel the competitive differentiation is becoming much clearer and more durable.
Detractors to performance included several healthcare focused holdings, such as the gene-silencing company Alnylam Pharmaceuticals and real-time blood glucose monitoring company Dexcom. In both cases they think the share price falls were unjustified given the significant progress the companies have made and the large audience of potential beneficiaries they are looking to address. The holding in LinkedIn impacted negatively on performance after the company reduced its profit guidance for 2016. The core recruiting business within LinkedIn continues to perform well but their hopes that the platform could evolve to support more targeted advertising have yet to be demonstrated.
EWI : Edinburgh Worldwide held back by healthcare exposure