CSL is the fourth largest company trading on the ASX 200. But Platinum Asset’s healthcare fund doesn’t own any CSL shares. Here’s why…
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If you haven’t bought any shares of CSL Limited (ASX: CSL) yourself, you likely still own part of the company via your super fund.
It’s been a volatile year for the company’s shareholders, who watched the CSL share price plunge 21% during the COVID-19 market panic in late February and early March. Since then, a series of sharp ups and downs have delivered a year-to-date gain of 10%.
Over the past 2 years, the CSL share price has soared 71%.
Despite CSL’s strong performance history and major blue chip status, Platinum Asset Management’s unlisted international healthcare fund doesn’t own any shares.
Platinum’s data reports that the fund returned 25.7% net of fees over the 12 months to October 2020, a period where the ASX 200 lost more than 10%.
So why doesn’t the fund own any shares of CSL?
Bianca Ogden, head of Platinum’s international healthcare fund believes CSL is a great company, but explains it may not be spending enough on R&D to keep up with the advancements made by competitors, particularly in the cutting-edge field of mRNA (messenger ribonucleic acid).
Ogden prefers Moderna Inc (NASDAQ: MRNA), which the fund has held since 2018.
According to the Australian Financial Review, Ogden was impressed by its mRNA vaccine technology, stating:
What does [the mRNA technology] mean to the vaccine industry – to the incumbents? That has been one of our major investment ideas since 2018 and why we went with mRNA. What can it do to the vaccine industry?
The Moderna share price leapt 16% higher in Friday’s trading on hopes its COVID vaccine will soon roll out across the world. Shares are now up 561% year to date.
According to Ogden:
A lot of people don’t actually understand . . . how it’s much more dependent on your manufacturing set up and your supply, than on drug risk.
But we also found that I can buy a plasma business at Takeda [Takeda Pharmaceutical Co Ltd (TYO: 4502)] for a lot less than if I buy a CSL. And when I then look at Takeda’s activity and changes that are happening to their R&D organisation, I find that more exciting.
The takeaway for CSL?
Lift research and development spending or risk losing market share.
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Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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