The Fund reported a pleasing return of 13.5% during the month due mostly to a 114% return in the Fund’s largest holding, Australian radiopharmaceutical company Telix. Helping markets was the announcement by Pfizer of strong Covid vaccine study results, which generally boosted sentiment, although this was not a substantial driver of gains in the Fund.
The Fund reported a pleasing return of 13.5% during the month due mostly to a 114% return in the Fund’s largest holding, Australian radiopharmaceutical company Telix. Helping markets was the announcement by Pfizer of strong Covid vaccine study results, which generally boosted sentiment, although this was not a substantial driver of gains in the Fund.
Telix signed an investment and distribution pact with Chinese pharmaceutical company China Grand Pharmaceutical entailing the sale of a 7.6% stake in Telix for AUD35mln as well as an upfront payment of $35mln, so $70mln in total. Telix stands to earn up to AUD400mln in milestone payments as well as royalties on future sales of its products in China.
China Grand Pharmaceutical acquired Sirtex Medical, an Australian radiopharmaceutical company in 2017 and is building an innovative pharmaceutical company with a focus on radiopharmaceuticals. David Cade, the head of business development at Telix formerly worked at Sirtex as chief medical officer so the companies are very familiar with each other.
The deal enables Telix to fully fund a large phase 3 global clinical study of its prostate cancer therapeutic drug TLX-591, which will commence in the first half of 2021. We expect the company to have very strong news flow over the coming 6 months including phase 2 data from its brain cancer therapeutic study, phase 3 data from its kidney cancer imaging study, FDA approval for its prostate imaging study, and the commencement of its global phase 3 study in prostate cancer. In total, the company now has six significant development opportunities in brain, kidney, and prostate cancer, which could transform Telix into a multibillion-dollar company over the next three years.
Another notable positive performer during the month was Japanese game developer Nexon, up 22%, which has a portfolio of games particularly for PCs in Korea, Japan, and China. The company is refocusing its games on the faster-growing mobile market where it has a distribution partnership with Chinese internet giant Tencent. A new title Dungeons & Fighters are expected to be released in the coming months which should drive sales in 2021.
German Solar inverter maker SMA Solar rose 28% on the back of strong results. We are optimistic that the new Biden administration will boost renewable programs in the USA which will benefit the company. SMA Solar is substantially cheaper than US peers Enphase and Solaredge, with room to grow margins and ratings over the coming years.
US heart monitor company Biotelemetry rose 24% also after reporting strong results. The company’s heart rate monitors are used to diagnose heart disease, which is growing in the USA.
Several holdings were weak during the month as they were more defensive in nature, lagging in a market rotation to cyclical stocks, including Genetic Signatures, Huya, Bio-Rad, and Sangamo.
Portfolio Manager
Portfolio Manager
The Pengana High Conviction Equities Fund (the Fund) invests globally in a concentrated portfolio of up to 20 stocks. The Fund can invest in both small and large cap stocks and is diversified across countries and sectors. We avoid investment in companies that are currently, in our opinion, unnecessarily harmful to people, animals or the environment.
1. Net performance figures are shown are those of Class A Units, after all fees and expenses and assume reinvestment of distributions. No allowance has been made for buy/sell spreads. Please refer to the PDS for information regarding risks. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
2. Inception 11 December 2014.
3. Annualised standard deviation since inception.
4. Relative to MSCI World. Using daily returns.
* For further information regarding fees please see the PDS available on our website.
