Edison Investment Research Limited
London, UK, 14 February 2018
Edison issues review on HBM Healthcare Investments (HBMN)
HBM Healthcare Investments (HBMN) reported profits of CHF72m for the third quarter of its financial year, buoyed by the takeover of long-term holding Advanced Accelerator Applications (AAA). The Switzerland-based fund invests globally in public and private healthcare companies and private equity funds, and is working to build its private company exposure back up towards long-term average levels following a strong period of IPOs and trade sales. The managers take a risk-aware approach to what can be a volatile sector, and have been taking profits on the back of clinical successes, as well as hedging c 20% of the listed equity exposure through a short position in an ETF tracking the NASDAQ Biotechnology index. The discount to NAV has narrowed in line with the general trend for investment companies, but remains wider than those of peers whose sole or main focus is listed equity markets. HBMN's shares currently yield 4.3%.
At 12 February 2018, HBMN's shares traded at a 14.5% discount to the 31 January net asset value. This is significantly narrower than both short- and longer-term averages (a range of 21.0% to 29.2% over one, three, five and 10 years) and is only modestly wider than an all-time low of 9.6% reached at the end of January 2018, but still represents an appreciable discount to peers. HBMN has adopted a high distribution policy and the shares currently yield 4.3%.
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