REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

13/06/2018 11:30

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 May 2018 and unaudited.
Performance at month end is calculated on a cum income basis

                      One     Three     One    Three     Five  
                    Month    months    year    years    years  
                         %         %       %        %        % 
 Net asset value       4.5       9.0    16.6     64.9    124.5 
 Share price           1.9      11.6    25.8     73.2    141.6 
 Benchmark*            1.2       5.4     4.7     27.6     66.2 

Sources: BlackRock and Datastream

*With effect from 22 March 2018 the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index replaced the Numis Smaller Companies
excluding AIM (excluding Investment Companies) Index as the Company’s
benchmark. The five year period indices have been blended to reflect this.

 At month end                                                                   
 Net asset value capital only:                                          591.06p 
 Net asset value incl. income:                                          598.19p 
 Share price                                                            538.00p 
 Discount to cum income NAV                                               10.1% 
 Net yield (1):                                                            1.7% 
 Total Gross assets (2):                                                £437.5m 
 Net market exposure as a % of net asset value (3):                      105.9% 
 Ordinary shares in issue (4):                                       73,130,326 
 2017 ongoing charges* (excluding performance fees) (5,6):                 0.9% 
 2017 ongoing charges* ratio (including performance fees) (5,6,7):         2.2% 

*Ongoing Charges: The management fee rate reductions, as detailed in the notes
below, will impact management fees in 2017 and onwards.   The impact of the
new fee arrangements, assuming the same level of performance from the manager
and assuming all other charges remain the same, would be to reduce the level
of Ongoing Charges borne by the Company.

1. Calculated using the 2017 interim dividend declared on 24 July 2017 and the
2017 final dividend declared on 12 February 2018 and paid on 29 March 2018.
2. Includes current year revenue and excludes gross exposure through contracts
for difference.
3. Long positions less short positions as a percentage of net asset value.
4. Excluding 7,400,000 shares held in treasury.
5. Calculated as a percentage of average net assets and using expenses,
excluding performance fees and interest costs for the year ended 30 November
2017.
6. With effect from 1 August 2017 the base management fee was reduced from
0.70% to 0.35% of gross assets per annum.
7. Effective 1st December 2017 the annual performance fee arrangements for the
Company have changed.  The annual performance fee is now calculated using
performance data on an annualised rolling two year basis (previously, one
year) and the maximum annual performance fee payable is effectively reduced to
0.90% of two year rolling average month end gross assets (from 1% of average
annual gross assets over one year). Additionally, the Company now accrues this
fee at a rate of 15% of outperformance (previously 10%). The maximum annual
total fees (comprising the base management fee of 0.35% and a potential 
performance fee of 0.90%) will therefore fall to 1.25% of average month end
gross assets on a two year rolling basis (from 1.70% of average annual gross
assets).

 Sector Weightings    % of Total Assets 
                                        
 Industrials                       34.7 
 Financials                        20.5 
 Consumer Services                 16.0 
 Technology                         8.6 
 Consumer Goods                     7.5 
 Health Care                        6.1 
 Basic Materials                    3.7 
 Oil & Gas                          2.0 
 Net current assets                 0.9 
                                  ----- 
 Total                            100.0 
                                  ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.08.17   30.11.17   28.02.18   31.05.18  
                          %          %          %          % 
 Long                 115.3      116.9      119.6      115.9 
 Short                  5.8        6.3        8.4       10.0 
 Gross exposure       121.1      123.2      128.0      125.9 
 Net exposure         109.5      110.6      111.2      105.9 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Ascential                                    2.8 
 Dechra Pharmaceuticals                       2.7 
 Integrafin                                   2.2 
 Robert Walters                               2.2 
 Fevertree Drinks                             2.2 
 Restore                                      2.1 
 YouGov                                       2.1 
 SSP                                          2.0 
 Bodycote                                     2.0 
 4imprint Group                               2.0 

Commenting on the markets, Dan Whitestone, representing the Investment Manager
noted:

During May the Company’s NAV per share rose by 4.5%* to 598.19p on a cum
income basis whilst our benchmark index rose by 1.2%*; the FTSE 100 Index rose
2.2%* (all performance figures are in sterling terms with income reinvested).

May proved a strong month for the Company, in fact the strongest month of
relative outperformance in the last 7 years*. Performance during the month was
driven by the long book, and the short book was flat, which we feel is a
strong outcome against the benchmark rise of 1.2%*, reflecting several
successes amongst our short positions. Some of this can be attributed to the
general shape of the market, with a reversal in areas that had been strong in
April notably resources and UK domestics, both areas we are structurally
underweight.

The reversal in UK domestics was driven by some significant profit warnings
within UK retail, which not only assisted the short book, but also adding
support, we think, to why we are structurally bearish on many consumer facing
UK domestic industries and why we don’t think many of these “value”
areas offer good value. However, despite the stock specific success in our UK
consumer facing short, this didn’t make it into our top 10 contributors for
the month due to the strength of other positions which were all long positions
(with the exception of another short position in the Oil & Gas sector which
cut its production guidance again).

The biggest contributor was from Integrafin, a UK savings platform for
financial advisors, which delivered strong results despite the recent market
volatility. This was a share we purchased at IPO (Initial Public Offering) and
subsequently increased our holding in recent weeks, so it was reassuring to
see this conviction rewarded.  Other strong contributors included YouGov,
which rose on buying out its remaining 80% stake in SMG, and Accesso, which
rose on a strong trading statement.

The biggest detractors were from Restore Group, Robert Walters, and
Superdry.  Restore Group weakened on an in-line trading statement but
revealed weakness in its shredding division. Robert Walters weakened on no
stock specific news-flow and probably just reflect a period of consolidation
after a very strong recent run its share price.  One share we did get wrong
is Superdry, the month’s biggest detractor. As mentioned earlier, we own
very few UK domestics, especially in bricks and mortar retail, so this was a
genuine exception.  The company issued a disappointing trading update showing
that in-store sales had suffered from the bad weather earlier in the year
while a shift in sales mix to lower margin wholesale and clearance activity
was impacting gross margins. The position is currently under review and
we’ve not added on this weakness.

Overall, we believe the portfolio is in good shape, our long positions are
trading well and the shorts have had a decent month on specific news-flow
which has helped reverse some of the squeezes that weighed on performance in
April and vindicated our investment thesis. We haven’t made any real changes
to overall positioning.

*Source: BlackRock

13 June 2018

ENDS

Latest information is available by typing www.blackrock.co.uk/thrg on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3
(ICV terminal).  Neither the contents of the Manager’s website nor the
contents of any website accessible from hyperlinks on the Manager’s website
(or any other website) is incorporated into, or forms part of, this
announcement.



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