Neil Woodford’s Patient Capital Trust will issue more shares to meet demand in the secondary market, as the £800m fund is now 75 per cent invested.
The fund has increased its net asset value per share by 3.1 per cent since its launch on 26 January this year to 101.86p, meaning it has “recouped initial charges and provided a modestly positive return” for investors, says Susan Searle, chair of the Patient Capital Trust board in the trust’s half year results.
The share price on the trust has risen by more than the NAV, now trading at a 11.4 per cent premium. Some of this gain is put down to the company’s inclusion in the FTSE 250 in mid-June, which led to a surge in index tracker buyers.
The board of the investment company has decided to start “tap issuance”, releasing shares at a premium to NAV in order to bolster the secondary market.
“In light of the current premium rating of the company’s shares, the board intends to implement a tap issuance programme…to satisfy excess demand in the secondary market,” says Searle.
The fund is now 75 per cent invested and expects to be fully invested by the end of the year.
The trust is heavily in the biotech industry, which Woodford has pegged as an area of growth. However, he says much of the fund’s performance so far has been delivered by early-stage investments, rather than listed companies.
“Although it is very early days, we are pleased that the company’s net asset value has moved forward modestly,” says Woodford. “Much of the positive performance to date has been delivered by holdings we would classify as early-stage. Indeed, our blue-chip holdings have typically detracted from performance thus far, with GlaxoSmithKline and AstraZeneca in particular showing short-term share price weakness.”
Among the top 10 holdings, which make up almost 34 per cent of the fund, are seven biotech companies, including the largest position in Prothena, a US firm creating immune therapies, followed by Verseon, which aids drug development.
“There is a great deal of enthusiasm in the US biotech sector about new potential treatments for cancer and in other areas of high unmet clinical need, as well as hopes of acquisitions by cash-rich pharmaceutical majors,” says Woodford.