Bellevue Healthcare (BBH)
05/03/2024
Results analysis from Kepler Trust
Intelligence
Over the financial year to
30/11/2023, the NAV total return was -12.7%, whilst the comparator
index (the MSCI World Healthcare total return index in Sterling)
produced a total return of -7.1% representing an underperformance
of 5.6% over the year. The share price (on a total return basis)
fell by 15.1%, with the discount to NAV finishing the year at
10.3%, compared to the previous year, when the shares closed at a
7.6% discount.
The trust targets an annual
dividend of 3.5% of preceding year-end NAV, paid out in two equal
instalments. The board has proposed a final dividend of 2.995p
which will be paid to shareholders in May 2024, representing a
total dividend for the last financial year of 5.99p. For the 2024
financial year, the board is proposing a total dividend of 5.04p.
The lower dividend than last year reflects the fall in NAV and
represents a prospective dividend of 3.3% at the current share
price of 151p.
14.3% of the outstanding
shares were redeemed at the annual redemption point of 30 November
2023. In addition, BBH bought back 16.4 million shares (or c. 3.4%
of the company) during the financial year.
The managers comment that the
reporting period was yet another year where external factors and
extraneous information served to pressure sentiment toward
portfolio holdings for non-fundamental reasons. The managers state
that "what we crave, more than anything else, is a bottom-up
stock-driven market environment where operationally superior
companies outperform poorer ones".
Kepler View
As the managers highlight in
their report, the financial year ending 30/11/2023 "has not been
smooth sailing". Fundamentals appear to be ignored by a
market that is focusing on momentum and themes. This echoes the
wider market, which is obsessed by developments in AI. In the
Healthcare sector, it is GLP-1 obesity drugs which sees the market
divided very simply into either obesity winners or losers. The
managers state that they have "not seen anything quite so kneejerk
since the tail end of the 1990s, and the similarly ludicrous 'old
versus new economy' debate over emerging tech
companies".
Bellevue Healthcare's (BBH)
strategy remains to invest in `healthcare change'. The past few
years may have been very challenging, but BBH's managers believe
fundamentals remain attractive, and the last financial year is just
one in which fundamentals were not recognised. BBH has seen a
welcome recovery in relative and absolute performance in the three
months to the end of February 2024.
BBH has a highly
differentiated and active strategy, noteworthy because of the
highly concentrated nature of the portfolio, and its specialist
focus. The north star for the managers investment process is
valuation, and in a market in which fundamentals are being ignored,
it is perhaps not surprising that they are struggling to deliver
outperformance. With a sustained recovery in sentiment, or
fundamentals being reflected in share prices, one might hope that
the previous track record of outperformance may return. In the
meantime, the trust has best of class structural characteristics
that in our view are very much on shareholders' side. For example,
management fees are charged on market capitalisation rather than
Net Assets, and there is an annual tender opportunity for
shareholders to exit at NAV.
CLICK HERE TO READ THE FULL REPORT
Visit
Kepler Trust Intelligence for more high quality
independent investment trust research.
Important information
This report has been issued by Kepler
Partners LLP. The analyst
who has prepared this report is aware that Kepler Partners LLP has
a relationship with the company covered in this report and/or a
conflict of interest which may impair the objectivity of the
research.
Past
performance is not a reliable indicator of future results. The
value of investments can fall as well as rise and you may get back
less than you invested when you decide to sell your investments. It
is strongly recommended that if you are a private investor
independent financial advice should be taken before making any
investment or financial decision.
Kepler Partners is not authorised to
make recommendations to retail clients. This report has been issued
by Kepler Partners LLP, is based on factual information only, is
solely for information purposes only and any views contained in it
must not be construed as investment or tax advice or a
recommendation to buy, sell or take any action in relation to any
investment.
The information provided on this
website is not intended for distribution to, or use by, any person
or entity in any jurisdiction or country where such distribution or
use would be contrary to law or regulation or which would subject
Kepler Partners LLP to any registration requirement within such
jurisdiction or country. In particular, this website is exclusively
for non-US Persons. Persons who access this information are
required to inform themselves and to comply with any such
restrictions.
The information contained in this
website is not intended to constitute, and should not be construed
as, investment advice. No representation or warranty, express or
implied, is given by any person as to the accuracy or completeness
of the information and no responsibility or liability is accepted
for the accuracy or sufficiency of any of the information, for any
errors, omissions or misstatements, negligent or otherwise. Any
views and opinions, whilst given in good faith, are subject to
change without notice.
This is not an official confirmation
of terms and is not a recommendation, offer or solicitation to buy
or sell or take any action in relation to any investment mentioned
herein. Any prices or quotations contained herein are indicative
only.
Kepler Partners LLP (including its
partners, employees and representatives) or a connected person may
have positions in or options on the securities detailed in this
report, and may buy, sell or offer to purchase or sell such
securities from time to time, but will at all times be subject to
restrictions imposed by the firm's internal rules. A copy of the
firm's Conflict of Interest policy is available on
request.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is authorised and
regulated by the Financial Conduct Authority (FRN 480590),
registered in England and Wales at 70 Conduit Street, London W1S
2GF with registered number OC334771.