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Investment Trust Insider on the importance of diversification

28
2017
November

Investment Trust Insider on the importance of diversification

James Carthew: Herald shows Woodford and Biopharma the importance of diversification

A month ago I wondered when Biopharma Credit (BPCR), the biggest investment company launch of the year, would get its flotation proceeds invested. Last week it took a big step towards answering this question by committing at least $222 million (£166 million) and, possibly, an additional $148 million to a new investment.

Superficially, this was great news although it turned out to be a loan to just one company, a Nasdaq-listed company called Tesaro (TSRO.O). The loan is secured against the revenue of just two drugs: Zejula, which tackles ovarian cancer by interfering with the DNA replication of cancer cells; and Varubi, an anti-emetic used for chemotherapy patients.

This represents significant stock specific risk given the loan could potentially account for 49% of the fund.

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