International Biotechnology Trust (IBT)
08/05/2024
Results analysis from Kepler Trust
Intelligence
IBT's NAV has again beaten
the NASDAQ Biotechnology Index during the six-months ending
29/02/2024. The NAV total return of 11.2% outpaced the index return
of 8.2%. The share price total return per share was 8.7%,
marginally ahead of the index, reflecting widening discounts across
the sector.
Increased confidence that the
interest rate cycle has peaked led to a change in investor appetite
for risk towards the end of 2023. This has continued into 2024,
indicating evidence of a nascent recovery in the biotechnology
sector.
The private equity portfolio,
which comprised 7.9% of total investments as at 29/02/2024 is
primarily represented by two venture capital funds managed by SV
Health. this part of the portfolio has seen some holdings within
the venture capital funds marked down over the interim
period.
The Company's dividend policy
is to make dividend payments equivalent to 4% of the Company's NAV,
as at the last day of the preceding financial year ending 31
August, through two semi-annual distributions. The first dividend
for the year of 13.9p per share was paid on 26 January 2024, and
the Board intends to declare the second dividend in July 2024 for
payment in August 2024.
The board continues to keep
the discount to NAV under close review and is committed to buying
back its shares to help manage the position. Although 1,060,776
shares were bought back, the discount widened from 6.3% to 8.7%. As
expected, the ongoing charges ratio has decreased since the
transition to Schroders, reducing from 1.4% to
1.3%.
Chairman of the board Kate
Cornish-Bowden said of the managers' move to Schroders "the
integration of the new Manager arrangements has gone well. We
received a positive endorsement of this strategic decision at the
AGM in December 2023, when shareholders voted by over 99% in favour
of continuation of the company".
Kepler View
The Biotechnology sector has
suffered three consecutive years of underperformance, but the green
shoots of a recovery are appearing, as evidenced by the M&A
cycle kicking back in. Ailsa and Marek have so far transitioned to
their new management house without any detrimental impact to
performance, which will be gratifying for the board and for
shareholders who, according to the board, expressed a strong desire
for continuity when SV Health took the decision to relinquish the
mandate.
We think it noteworthy that
the headline NAV performance numbers above under-play Ailsa and
Marek's strong performance from the quoted portfolio, which rose by
13.1% (gross of management and performance fees) for the six-month
period, outperforming the reference index which returned 8.2%. The
pair passed their three-year anniversary as joint lead-managers on
15/03/2024. Since taking over the helm, they have delivered a
similarly impressive quoted portfolio NAV total return of 14.7%
(1st April 2021 to 31 March 2024), well ahead of the
reference index which increased by 5.0%, a period which encompassed
a huge amount of volatility.
Ailsa and Marek's approach to
investment is pragmatic and valuation-sensitive, with a strong
focus on risk management. Valuations, M&A and the macroeconomic
outlook contributed to the managers making a well-timed move into
small caps in Q4 2023, and while they have since taken some profits
and allowed gearing to fall, Ailsa and Marek maintain a positive
outlook for the sector. The team remains focused on identifying
companies with innovative technologies, strong intellectual
property and solid growth potential. IBT has an actively managed,
diversified portfolio, with a team behind it that has shown it can
add value through the highs and lows of sentiment toward this
volatile sector. With the discount to NAV at a historically wide
level, those who share the board's belief that a more benign
economic environment and robust industry fundamentals will give
investors greater confidence to invest in the biotechnology sector,
may see this as an opportunity.
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.
