The double-digit discount on the Woodford Patient Capital Trust represented the trough of disillusionment in the investment trust, according to Crystal Amber, an investor in the investment trust.
Crystal Amber fund manager Richard Bernstein said he had significantly added to his holding in Woodford’s investment trust at several points over the last financial year.
In Crystal Amber’s financial results, Bernstein said: “At the time of the fund’s investment in WPCT, not only had the premium eroded, but the shares were trading on a double-digit discount. The fund believes that the share price represented the trough of disillusionment and was more a reflection of some setbacks within the portfolio of Woodford’s Equity Income fund.”
Crystal Amber is an investment trust itself and sits in the UK All Companies sector.
FTSE 250 exit and Prothena
Crystal Amber’s results reveal it built up its position on the back of two notable events during the financial year.
It significantly increased its shareholding when Patient Capital was dumped from the FTSE 250 and faced selling pressure as a result. Bernstein also commenced buying immediately following news Celegene, the world’s largest haematology biopharma company, had injected £150m cash into Prothena.
“The fund continues to believe that the current share price represents an attractive entry level to access a growth portfolio of highly scalable businesses.”
Crystal Amber holds a 2.3% stake in the Patient Capital Trust at an average cost of 78.2p per share. The holding represents 7% of NAV.
Futures protect Crystal Amber from FTSE sell-off
Total return for the £226.1m Crystal Amber investment trust was 22.8% over the reporting period ended 30 June 2018. Its Numis Small and Mid-cap Companies benchmark returned 8.2%.
The fund benefited from portfolio protection in the form of FTSE put options during the market sell-off in February. Options contributed 1.3% to NAV performance over the period.
Key performance contributors were Hurricane (12.8% ), FairFX (9.5%) and Ocado (4.4%), while detractors were GI Dynamics (2.3%) and Leaf Clean Energy Co (2%).
Bernstein was cautious on the outlook due to trade tensions and Brexit.
“In the coming year, the fund may opportunistically increase its cash balances and will continue to focus on activist opportunities that can generate attractive returns regardless of broader market conditions.”
