REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

29/04/2019 14:25

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 March 2019 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       2.5      10.5    -0.5     48.8     67.4 
 Share price           3.3      17.5     7.7     70.1     79.0 
 Benchmark*            0.4       7.0    -4.1     19.6     24.2 

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 performance of the indices have been blended to reflect this.

 At month end                                                                  
 Net asset value capital only:                                         535.24p 
 Net asset value incl. income:                                         537.33p 
 Share price                                                           506.00p 
 Discount to cum income NAV                                               5.8% 
 Net yield (1):                                                           2.0% 
 Total Gross assets (2):                                               £392.9m 
 Net market exposure as a % of net asset value (3):                      95.8% 
 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 2018 final dividend declared on 12
February 2019 and paid on 28 March 2019.
2. Includes current year revenue and excludes gross exposure through contracts
for difference.
3. Long exposure less short exposure 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 management 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 
                                        
 Consumer Services                 27.2 
 Financials                        24.1 
 Industrials                       20.0 
 Technology                         8.8 
 Health Care                        7.9 
 Consumer Goods                     6.5 
 Basic Materials                    2.7 
 Telecommunications                 1.2 
 Net current assets                 1.6 
                                  ----- 
 Total                            100.0 
                                  ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.05.18   31.08.18   30.11.18   28.02.19  
                          %          %          %          % 
 Long                 115.9      119.4      103.7      108.7 
 Short                 10.0        9.6       10.5       14.9 
 Gross exposure       125.9      129.0      114.2      123.6 
 Net exposure         105.9      109.8       93.2       93.8 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Dechra Pharmaceuticals                       3.2 
 Aveva                                        3.1 
 SSP                                          3.1 
 4imprint Group                               3.1 
 YouGov                                       3.0 
 Integrafin                                   2.7 
 JD Sports Fashion                            2.7 
 Bodycote                                     2.5 
 Workspace Group                              2.5 
 WH Smith                                     2.4 

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

During March the Company’s NAV per share rose by 2.5% to 537.33p on a cum
income basis, outperforming our benchmark index, the Numis Smaller Companies
plus AIM (excluding Investment Companies) Index, which rose by 0.4% (all
performance figures are in sterling terms with income reinvested).

Despite the ongoing challenging UK political backdrop and endless speculation
on the outlook for global growth, the UK market rose and the Company delivered
another month of outperformance versus our benchmark, reflecting some key
stock and industry specific successes on both the long and short side.

The largest positive contributor to performance during the month came from our
long position in 4imprint, a UK listed, but US focused, direct marketing
business of promotional goods. The company reported very strong full year
results with upgrades to forward guidance, which saw the shares rise by more
than 20% and contributing more than 50bps to relative performance. This has
been a long-term core holding for us and has been a strong contributor to
performance for many years. It is the market leader in the US by some distance
but has less than 4% market share despite compounding its revenues organically
in the mid teens for over 10 years, reflecting not only the size of the market
but just how fragmented the competitive set is.

On the short side we benefitted from our position in a UK contractor, which
despite having completed an emergency fund raise in December has followed up
in March with a series of negative updates, including restating its debt
position once again. Its half-year results revealed a miss versus profit
expectations, incremental contract provisions and significant cash outflows.
We feel the company has yet to fully disclose the full extent of its troubles
and we remain short.

The largest detractor was software business Craneware, which fell after
reporting half-year results which met expectations, but did not beat
expectations. As the shares appear expensive on face value, some share price
consolidation is understandable, but these results do not alter our view of
the long-term growth prospects for the business. This remains the market
leader in the provision of procurement and cost analytics software for US
hospitals.

In the comments above we have focused on three stocks in particular to
highlight the importance of stock specifics in the current environment.
Whether they are key contributors or detractors, focusing on company and
industry fundamentals will be the driver of this Company’s returns.
Thankfully during the month we have been on the right side of company updates
in the vast majority of cases, and we could point to many other examples of
companies that have continued to deliver, for example Robert Walters and
Bodycote. We therefore continue to feel comfortable with the portfolio
positioning. While the gross and net exposures remain lower than normal
levels, reflecting the risks in the current environment, we believe the
portfolio can continue to generate alpha driven by stock and industry specific
outcomes, regardless of the wider macro environment.

(1)Source: BlackRock as at 31 March 2019

29 April 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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