HBM Healthcare Investments (SIX:HBMN) has reported extremely strong results for the first half of FY19 (to 30 September), with net earnings of CHF177m. While market conditions have turned negative in October, HBMN’s portfolio of private investments (c 36% of the total) and a market hedge covering c 20% of the listed portfolio should help to limit NAV volatility if the sell-off is prolonged. Results have been buoyed by good clinical data and a number of successful IPOs from the private portfolio, and HBMN’s managers are focused on finding new private opportunities to replace those now in the public portfolio. Ten new investments in H119 were diversified by clinical focus and geography (US, Europe and Asia). HBMN’s shares have re-rated substantially over the past year, arguably as a result of the ongoing evidence of successful execution of its strategy, as well as the high distribution policy (c 5% of NAV paid out each year).
Investment strategy: Public/private healthcare fund
HBMN aims to build a well-balanced global portfolio of private and public companies across the healthcare and biotechnology spectrum. At the heart of the strategy is a focus on more mature private companies with attractive valuations and convincing business models in terms of product pipeline, technology and management. Access to emerging companies in Asia is largely via funds, while the public equity portfolio (currently c 66% of assets) includes many stocks that began as private investments.
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