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After the volatile first quarter BB MEDTECH shares outperformed the
broader market in the second quarter, gaining +10.5% (incl. the
dividend of CHF 0.80) while the Swiss Market Index (SMI) declined
-3.7%, the German benchmark index (DAX) -1.8% and the TecDax -1.1%.
The first half of 2008 was generally marked by continued turmoil on
financial markets worldwide. During the first half the value of BB
MEDTECH shares retreated by -25.4% (incl. the dividend) to CHF 54.75.
The SMI had a negative performance of -18.0%, the DAX -20.4% and the
TecDax -20.9%. Net Asset Value per BB MEDTECH share declined by
-22.6% to CHF 59.67 during the first half. The company's equity
(excl. treasury shares) amounted to CHF 726 mn as of June 30, 2008.
The trend reversal in the second quarter was supported by most of our
holdings, especially Qiagen, Tecan and Fresenius. Nobel Biocare, on
the other hand, a holding we had reduced significantly in preceding
quarters, continued to retreat during the second quarter. The stock
market had been expecting a quicker turnaround of the company and was
disappointed once again when management lowered its guidance for
fiscal 2008.
We continue to implement our strategy of broadening the portfolio
with the ultimate aim of having long term participations in 10 to 15
attractive medical technology companies. Further adjustments were
made to the portfolio in the second quarter of 2008 as we built up
positions in fast growing companies active in the fields of molecular
diagnostics, patient monitoring and ophthalmology. Our holdings in
Celera and Epigenomics were increased in the second quarter (to 3%
and 1% of equity as per June 30). Masimo (2%) was back in the
portfolio in the second quarter after its shares corrected and we
built-up a new position in Optos (<1%). Our long-standing core
holding in Nobel Biocare was reduced to 7% of equity in the second
quarter (36% as of December 31, 2007). Our position in Sonova was
reduced to 13%, while the weightings of our core holdings in Qiagen
(23%), Tecan (14%) and Fresenius (13%) changed only slightly, if at
all. Galenica was reduced to 4% of equity, Millipore to 1%.
As of June 30, 82% of BB MEDTECH's assets were invested, a reflection
of both the ongoing reallocation process and the uncertain market
environment. We are confident the available liquidity will allow us
to successfully realign the portfolio over the coming months while
taking advantage of the opportunities the current stock market
weakness offers.
Qiagen remains our largest participation. Digene has been
successfully integrated and the company is poised to further
strengthen its market leadership in DNA/RNA sample preparation and
molecular diagnostics. The acquisition of Corbett fills the final
missing link for a complete workflow offering. In May Sonova
published a good set of results for the 2007/08 business year. It
remains a fundamentally good play in the global hearing instrument
market. Tecan and Fresenius have also developed in line with
expectations.
The four companies that were added to the portfolio, or in which we
took on more exposure, are young, fast growing companies with a
convincing technology base and sound management. California-based
Masimo has successfully positioned itself in the pulse oximetry
business, a USD 1 bn sub-segment of the global patient monitoring
market, with an innovative and competitively superior product
portfolio. It has displayed impressive growth rates. Optos, a company
headquartered in Scotland and listed on the London Stock Exchange,
develops and markets equipment used to examine the retina, the tissue
structures lining the back of the eye that provide vision. The
technology developed by Optos is patent-protected and allows retinal
exams to be performed in seconds, without the use of dilating eye
drops. The US company Celera, which was spun off from its parent
corporation Applera on June 30, boasts one of the most comprehensive
pipelines for markers in cardiology and oncology. The German company
Epigenomics, developing the Septin-9 blood test for early detection
of colorectal cancer, is also active in the rapidly expanding market
of molecular diagnostic testing.
We remain convinced that the medical technology market, driven as it
is by demographic developments and other factors, offers
above-average returns over the long term. BB MEDTECH will continue to
focus on attractive and fast growing market segments such as
molecular diagnostics and selectively invest in the most promising
companies in each segment. Our extensive industry network and the
expertise of the Board of Directors and the management team are key
elements of our investment strategy.
Regular, close contact with the management of the companies in our
portfolio as well as of potential investment candidates is also an
important factor. We continue to target an excess return in the long
term with our sector-specific investment strategy rooted in thorough
and sound fundamental analysis, as is reflected in our track record:
BB MEDTECH shares have advanced +177% during the period from early
2000 to the end of June 2008 (incl. dividend payouts).
The composition of BB MEDTECH's portfolio as at June 30, 2008 is the
following (in % of equity):
Qiagen 22.8%
Tecan 14.4%
Fresenius preferred shares 10.1%
Fresenius common shares 3.3%
Sonova 13.1%
Nobel Biocare 7.3%
Galenica 4.3%
Celera 3.2%
Masimo 1.6%
Millipore 0.7%
Epigenomics 0.7%
Optos 0.3%
Vascular Innovation preferred shares1) 0.6%
SWAP agreement on treasury shares 0.1%
Put option Nobel Biocare (short) (0.4%)
Put option Nobel Biocare (short) (0.4%)
Total securities CHF 592.4 mn 82.3%
Liquid funds (net) CHF 203.7 mn 28.1%
Other assets CHF 12.0 mn 1.7%
Other payables CHF (82.5) mn (11.4%)
Total shareholder's equity CHF 725.6 mn 100.0%
Own shares (in % of company) 16.1%
1) unlisted company
The quarterly report is available on www.bbmedtech.com
For further information please contact:
Bellevue Asset Management AG, Seestrasse 16, CH-8700 Kusnacht/Zurich
Anja Stubenrauch, phone +41 44 267 67 00
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BB MEDTECH AG
Vordergasse 3 Schaffhausen Switzerland
WKN: AONFN4;
ISIN: CH0038390016; Index: IGSP;
Listed: Investment Companies in SWX Swiss Exchange;
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