Another great month for our health stocks

The Fund rose 4% during August, helped by a strong performance from most healthcare holdings.

Full written commentary available HERE

Top Holdings (alphabetically)

Bavarian Nordic Denmark Health Care

Bio-Rad Laboratories Inc United States Health Care

Genetic Signatures Limited Australia Health Care

Photocure Norway Health Care

Telix Pharmaceuticals Ltd Australia Health Care

Norwegian bladder cancer diagnostic producer Photocure rose 26% after releasing better than expected results as patients resume bladder cancer surgery and follow up screening. On the 1st of October the company will regain the distribution rights to its European business which will boost revenue by 50-60%, which is still not fully appreciated by the market in our view.

Australian radiation therapy and diagnostic producer Telix rose 27% after reporting results. The company highlighted that it is more likely to partner in its Phase 3 study in prostate cancer rather than raise capital to fund the trial itself, an issue which had been concerning the market.

Danish vaccine producer Bavarian Nordic rose 9% after reporting quarterly results where it stated that it will commence a COVID vaccine trial by year-end if it receives the necessary funding. The company believes its vaccine will only require one shot due to very high levels of antibodies seen in animal studies when compared with other leading vaccines.

Australian medical imaging software company Mach7 reported solid results and rose 10%.

On the negative side the portfolio’s optical communications holdings Lumentum, Inphi and Ciena were all weak falling 10%, 15% and 7% respectively despite Inphi and Lumentum reported strong results.

Australian molecular diagnostic test producer Genetic Signatures was weak after reporting guidance for the current quarter that, although up 25% from the prior quarter, was below market expectations given surging COVID testing demand in Australia had raised expectations. International sales were only 15% of total revenues in the June quarter but ultimately the company expects that the international business will be much larger than the domestic business. Sales have commenced in the USA for its Covid reagents but full approval of its test has not yet been granted, which will see the company achieve much higher prices per test.

Rakuten, Japan’s largest online retailer fell 5%. The company continues to build out the fourth mobile network in Japan incurring heavy losses in the process, but these should peak this year as the company signs up subscribers. Mobile phone prices are very high in Japan and the government is actively supporting measures to change this. Rakuten offers low prices, bundling its service with loyalty scheme points from its online shopping business giving it a unique marketing edge. We believe the market is overlooking the value in its core online shopping franchise.