HBM boosts dividend by 20% after stellar year

HBM boosts dividend by 20% after stellar year

London-listed HBM Healthcare (HBMN) has proposed a CHF 7/share dividend for year to end April, a 20% rise, after a strong year in which it saw a 11% rise in NAV and 34% rise in share price, beating the broadest biotech index and all other sector specialist closed end funds by a significant margin. The proposed dividend is equivalent to a 4.9% yield based on the end-year share price (4.1% based on the current share price of CHF168.8).

HBM has a mixed portfolio of private and public biotech companies, with the latter largely selected from outside the main index constituents, in contrast to the stock selection strategy employed by most of its peers. Within the private portfolio, HBM added three larger private investments (Amicus Ltd, Harmony Biosciences and Y-mAbs) and ten smaller investments during the year. It noted the valuation of Cathay Industrial was increased on the strength of its business performance. Two private investees were subject to takeovers – TandemLife/Cardiac Assist by LivaNova and True North Therapeutics by Bioverativ/Sanofi and two completed IPOs – ARMO BioSciences and Homology Medicines. Subsequent to the year end, ARMO Biosciences was acquired by Lilly for $1.6bn.

Within the public portfolio, Advanced Accelerator Applications was sold to Novartis during the year under review. Other major contributions  in the period were AnaptysBio, Argenx, Esperion Therapeutics and Neurocrine Biosciences, while the decliners were Vectura, Pacria, Tesaro and Nabriva.

HBM’s performance was also the top ranked of the 13 biotech-specialist closed end funds monitored by Marten & Co in the year to 30 April (see table below). The trust’s strong share price rise in its financial year closed what had previously been a surprisingly large discount to NAV, which currently stands at about 5.2%.