This is best illustrated by the contrasting fortunes of the quoted and unquoted elements of the portfolio. For example, in 2018, 20 unquoted holdings were revalued upwards, with 16 positions revalued downwards and 18 unchanged. This is broadly consistent with the operational progress that we have witnessed from the portfolio – not everything has progressed as we anticipated, but we’ve seen more positive developments than negative.
This pattern, was not replicated among the quoted stocks, however. The operational performance of the quoted portfolio was broadly similar to that of the unquoted element. It was by no means all positive, but collectively, we have seen many more operational steps forward than steps back from the quoted businesses.
The share price performance of the quoted portfolio, however, was starkly different in 2018. This is not a reflection of what has happened to the listed businesses in which we have invested. Primarily, the decline in share prices across the portfolio of quoted businesses offers further evidence of the market’s aversion to early-stage investment opportunities in the current environment.
Importantly, in most instances, the share price behaviour we have seen is not linked to a deterioration in individual company fundamentals. Considerable progress has been made across much of the portfolio, which isn’t yet reflected in share prices or valuations.
There are many examples of companies in the portfolio that have made meaningful progress on the road to commercialisation. Several have overcome significant challenges to get where they are today. Patience has been required to get to this stage and it remains a prerequisite for investing in this part of the asset class. We remain confident in the long-term investment opportunity and we are doing everything that we can to ensure positive outcomes for the companies in which the trust has invested.