The discount on the Woodford Patient Capital Trust has narrowed within the second half of April as a handful of holdings post positive updates.
The discount to net asset value sat at 14.2% on 25 April. A Hargreaves Lansdown update this month highlighted that it had been as wide as 16.2% on 15 April, in contrast to a 12-month average of 12.0%.
On Friday, a quartet of holdings posted positive updates with stem cell researcher Reneuron up 22% due to positive clinical trials for a blindness treatment. That brought year-to-date returns to 520% making it the second largest riser in the FTSE Aim All Share Index this year, just behind 541.7% returns from MX Oil, according to Bloomberg data.
Xeros Technology announced a commercial agreement for its water-saving laundry technology with IFB Technologies and Oxford Nanopore revealed it was working with Chinese sequencing business Grandomics for affordable genome medicine services.
Also on Friday, Inivata published real-world utility of its biopsy test for use in advanced non-small cell lung cancer.
The flurry of positive updates followed welcome news from Prothena, earlier in the month, which was one of Woodford’s biggest blow ups in 2018. On 18 April, shares rose off the back of an announcement it was exploring potential business development opportunities, which could result in further clinical investigation of NEOD001.
It would represent a way forward for a programme that was written-off in April 2018. Prothena shares crashed 70% when the firm announced it was discontinuing the development of its star drug for AL amyloidosis treatment.
Hargreaves sticks by Woodford for ‘diversification’
A Hargreaves research note published earlier in the month said the performance of the Patient Capital Trust in 2018 highlights its diversification potential.
Shares on the £745.1m investment trust fell 2.8% in 2018 compared to 9.5% falls in the FTSE All Share, according to FE Analytics.
The net asset value delivered even better relative performance with positive returns in 2018, said Hargreaves investment analyst Dominic Rowles, who added this was set against “a difficult period for most major stock markets”.
Rowles said: “This shows how differently unquoted companies (those that aren’t currently listed on a stock market) can perform. It means the trust could provide useful diversification to a wider investment portfolio, though we think its higher-risk and specialist nature means it should only form a small portion.”
At the same time, he described performance since launch as disappointing. “The manager thinks political and economic uncertainty has put investors off backing companies that are earlier in their development. In his view it’s just a matter of time before investors realise how much potential they’ve got.”
In contrast to the figures highlighted in the Hargreaves research note, Patient Capital shares have marginally fallen in the year to date by 0.1%. That contrasts with the 12.6% gains in the FTSE All Share over the period.
