REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

29/01/2019 17:20

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 December 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      -5.0     -17.8   -11.5     30.6     55.7 
 Share price          -4.4     -20.3    -6.6     26.7     52.1 
 Benchmark*           -5.2     -14.6   -16.7     10.6     20.1 

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:                                         483.82p 
 Net asset value incl. income:                                         493.19p 
 Share price                                                           437.00p 
 Discount to cum income NAV                                              11.4% 
 Net yield (1):                                                           2.2% 
 Total Gross assets (2):                                               £360.7m 
 Net market exposure as a % of net asset value (3):                      94.3% 
 Ordinary shares in issue (4):                                      73,130,326 
 2018 ongoing charges (excluding performance fees) (5,6):                 0.6% 
 2018 ongoing charges ratio (including performance fees) (5,6,7):         1.3% 

1. Calculated using the 2018 interim dividend declared on 26 July 2018 and
paid on 29 August 2018, together with 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
2018.

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 is 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%) are therefore 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 
                                        
 Financials                        22.9 
 Industrials                       22.7 
 Consumer Services                 22.6 
 Technology                        10.2 
 Health Care                        7.1 
 Consumer Goods                     4.8 
 Basic Materials                    3.1 
 Oil & Gas                          0.9 
 Telecommunications                 0.6 
 Net current assets                 5.1 
                                  ----- 
 Total                            100.0 
                                  ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  28.02.18   31.05.18   31.08.18   30.11.18  
                          %          %          %          % 
 Long                 119.6      115.9      119.4      103.7 
 Short                  8.4       10.0        9.6       10.5 
 Gross exposure       128.0      125.9      129.0      114.2 
 Net exposure         111.2      105.9      109.8       93.2 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 SSP                                          3.2 
 Ascential                                    3.0 
 Aveva                                        2.8 
 Craneware                                    2.7 
 Dechra Pharmaceuticals                       2.7 
 YouGov                                       2.5 
 Integrafin                                   2.5 
 Bodycote                                     2.4 
 4imprint Group                               2.4 
 Robert Walters                               2.3 

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

During December the Company’s NAV per share fell by 5.0%(1) to 493.19p on a
cum income basis, outperforming our benchmark index, the Numis Smaller
Companies plus AIM (excluding Investment Companies) Index, which fell by
5.2%(1); the large cap FTSE 100 Index fell by 3.5%(1) (all performance figures
are in sterling terms with income reinvested).

Equity markets around the world continued to fall during December as
disappointing economic data sparked further fears of a slowdown in global
growth, while ongoing trade tensions and European political uncertainty added
to the concerns. Against the wider market falls, the Company has started its
new financial year on a positive note by outperforming its benchmark. In
aggregate the long book fell during the month while the short book made a
positive contribution of 90bps (basis points).

Within the long book the Company benefitted from a number of core holdings
which recovered some of the lost ground in the prior two months. As noted in
our October and November updates, the market falls were most heavily
concentrated in highly rated growth shares, with a number of holdings falling
heavily despite no specific negative newsflow. It was therefore pleasing to
see a number of these high quality businesses outperform the falling market,
for example SSP, Robert Walters and Integrafin. The Company also benefitted
from a strong contribution from UK investment platform AJ Bell, following its
successful IPO (Initial Public Offering) during the month. This is a sector
that we know well and we had engaged with the company many times ahead of the
IPO.

Within the short book we saw a strong contribution from a number of companies
that fell in response to negative stock specific newsflow. Most notably a
short position in a well known UK electrical retailer fell by nearly 25% off
the back of a trading update that resulted in a material downgrade to earnings
and cashflow expectations. We also benefitted from some other stock specific
shorts in December, reflecting negative market updates.

The largest detractor was from our long position in Craneware, a UK software
company focused on the US healthcare market. The shares fell during the month
for no specific reason other than being an ‘optically expensive’ growth
share. The company did however issue a positive trading update towards the end
of December which helped the shares recover some of the losses.

Our financial year has started with a continuation of the elevated levels of
volatility seen last year and declining markets globally. We are of the view
that this increased volatility looks unlikely to abate in the near term as
there are growing challenges to the global growth outlook. With this increased
volatility in mind we have continued to run with a lower gross and net
exposure than we would have in normal market conditions. Despite this, we
continue to believe that there is enough growth in the world for
differentiated and disruptive companies to prosper, and we therefore maintain
confidence in our long book and for a recovery in many of our investments. As
a reminder within the long book we continue to focus on well capitalised
companies, with strong and enduring growth prospects that we believe will
continue to prosper regardless of the wider macro environment. New shorting
opportunities continue to present themselves, so this combined with the
market’s reappraisal of financial leverage and the ongoing wave of
disruption undermining incumbents’ profit pools should serve us well.

(1)Source: BlackRock as at 31 December 2018

29 January 2019

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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