Henderson Opportunities Trust has published interim figures covering the six months ended 30 April 2016. The company’s net asset value fell by 2.4% over the period, while the FTSE All Share Total Return ( the benchmark) remained flat. The share price fell by 8.8%, which was more than the NAV. At the end of April the share price discount to NAV was 14.9%.
They say this underperformance against benchmark is disappointing, but follows a long period of outperformance. Over recent years their stronger weighting in smaller companies has clearly contributed to outperformance but in the period under review market sentiment favoured larger companies, with the FTSE 100 returning a rise of 1.5% against a fall of 2.7% in the FTSE 250. They believe the market’s preference for larger companies in the first half resulted from an increase in investor caution and concern about the underlying strength of the UK economy.
An interim dividend of 5.5p will be payable on 23 September 2016 to shareholders on the register of members on 19 August 2016. This compares with 5.0p for the same period last time, an increase of 10%.
The manager’s report lists the principal contributors to performance – positive and negative.
Top Five Contributors Six Month Return Relative Contribution
% %
4D Pharma 17.0 +1.3
RWS 39.3 +0.6
Glencore 44.8 +0.4
Horizon Discovery 41.8 +0.4
XP Power 18.9 +0.3
4D Pharma, the developer of live bio-therapeutics, had a busy six months taking its two lead products into the clinic for trials, raising an additional GBP30m from shareholders, acquiring Tucana from University College Cork, to aid its work in microbiome signatures and, most recently, acquiring the production assets of Instituto Biomar in microbial fermentation to gain greater control over the production process. The company now has 15 assets in various indications including cancer, multiple sclerosis and asthma. RWS, the international patent translations and search service business, has enjoyed very strong trading also making its largest acquisition, CTi, which brings the world’s leading life sciences translation and linguistic validation provider and provides another significant leg to the enlarged business. Glencore, the Swiss-based diversified natural resources group, raised over GBP1.5bn from shareholders and senior staff in September 2015 just as the sector was entering freefall making the investment volatile. This necessary action gave the company financial headroom to embark on a significant business re-structuring which is producing the benefits promised. Horizon Discovery, the life sciences service company, has shown progress towards full year break-even in 2017 and a high growth future enhanced by significant barriers to entry. Lastly, XP Power, the power supply manufacturer, has enjoyed good trading and has entered the high voltage market which extends its addressable market materially.
Bottom Five Contributors Six Month Return Relative Contribution
% %
hVIVO -24.5 -0.7
NAHL -37.3 -0.7
Vertu Motors -22.0 -0.7
Snoozebox -95.8 -0.7
IP Group -27.7 -0.6
hVIVO, the bio-medical services company, has seen weaker trading in its traditional space of providing outsourced trials services to pharmaceutical clients but is making steady progress in trials for its own emerging product portfolio. This transition will take time to work through but the company is well funded. NAHL, a marketing services company focused on the personal injury and medical negligence market saw a very sharp fall in its shares when the Chancellor’s Autumn Statement contained provisions for consultation to limit personal injury claims and to adjust the value limit for claims within the Small Claims Court. This consultation is already late so they expect the shares to remain at these lower levels until some clarity is available. Vertu Motors, the UK’s fifth largest motor retailer, has been trading strongly so a fall of 20% in the share price looks unjustified but the market is worried about “Brexit” and the possibility of a fall in sterling which would make imported vehicles less profitable for them. If the EU Referendum vote is to stay or fears for sterling are unfounded, they would expect shares like Vertu Motors to perform well. They had supported Snoozebox, which provides temporary portable hotel accommodation, to finance its continued development of this nascent market but boardroom disagreements and departures and a realistic review of finances has seen the shares tumble so they have sold. Lastly, IP Group, the university spin out and commercialisation specialist, has demonstrated steady progress with expansion in the USA and also within its existing portfolio companies. However, the stock market has become a little tired in waiting for its lead company Oxford Nanopore to announce an IPO. They hope this will be later this year or early in 2017.
HOT : Henderson Opportunities suffers as large cap outperforms