Worldwide Healthcare maintains strong run and moves to premium
Despite seeing a relatively flat-to-down month in November, Worldwide Healthcare Trust (WWH) generated a 15% increase in NAV and 18% rise in its share price in the 11 month year-to-date period, comfortably beating the 9% rise in its benchmark index, according to its latest monthly factsheet. Moreover, the strong performance and growing investor interest in healthcare this year has brought the OrbiMed-managed trust to a small premium (0.7%) to NAV (see graph attached). The NAV premium should be a note of caution to potential investors, as the stock could be vulnerable to a change in sentiment that might bring about a return to a more normal modest discount, even if the underlying NAV improves.
Performance in the past month was hit by declines for a number of the trust’s strategic biotech stocks, with this portion of its portfolio was down by c. 2% in November, offsetting gains made elsewhere. Notably, share price falls were recorded for US biotechs, Regeneron Pharmaceuticals (third largest holding at 3.4% of NAV) and Alexion Pharmaceuticals (seventh, at 3.0%). Puma Biotechnology has been one of the trust’s best performers for 2017, despite having a poor month in November after concerns at initial sales of breast cancer drug Nerlynx. Puma’s stock rose threefold over the course of the year after the FDA – somewhat controversially – approved its Nerlynx, although it remains ~30% off its peak.
Worldwide Healthcare’s largest holding is in the Danish diabetes specialist Novo Nordisk (3.8% of NAV), which has enjoyed a strong run this year with stock up from DKK250 to DKK336. Another pharma giant in the top 10 is Eli Lilly, which is fifth placed (3.2% of NAV). Lilly’s stock has gained around 10% this year and remains popular with investors in the US for its long-term growth outlook relative to peers.
Earlier this month, Worldwide Healthcare announced that veteran US biotech analyst Sam Isaly had stepped down as a director both of the trust and its manager OrbiMed, although other executives in that firm would continue in the role.
WWH : Worldwide Healthcare maintains strong run and moves to premium