REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

14/06/2019 14:50

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)

All information is at 31 May 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       1.2       9.6    -2.2     54.0     86.3 
 Share price          -2.2       8.6     0.8     70.0    100.9 
 Benchmark*           -0.9       3.6    -7.0     20.6     31.0 

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:                                         569.76p 
 Net asset value incl. income:                                         574.33p 
 Share price                                                           532.00p 
 Discount to cum income NAV                                               7.4% 
 Net yield (1):                                                           1.9% 
 Total Gross assets (2):                                               £420.0m 
 Net market exposure as a % of net asset value (3):                     100.5% 
 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                      27.1 
 Financials                             22.4 
 Industrials                            21.9 
 Consumer Goods                          9.3 
 Technology                              7.7 
 Health Care                             7.6 
 Basic Materials                         2.5 
 Telecommunications                      1.6 
 Net current liabilities                -0.1 
                                       ----- 
 Total                                 100.0 
                                       ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.08.18   30.11.18   28.02.19   31.05.19  
                          %          %          %          % 
 Long                 119.4      103.7      108.7      113.7 
 Short                  9.6       10.5       14.9       13.2 
 Gross exposure       129.0      114.2      123.6      126.9 
 Net exposure         109.8       93.2       93.8      100.5 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 YouGov                                       3.1 
 Aveva                                        3.1 
 JD Sports Fashion                            3.0 
 Dechra Pharmaceuticals                       3.0 
 4imprint Group                               2.9 
 SSP                                          2.9 
 IntegraFin                                   2.8 
 Watches of Switzerland                       2.7 
 Serco                                        2.3 
 Bodycote                                     2.3 

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

During May the Company’s NAV per share rose by 1.2%(1) to 574.33p on a cum
income basis, outperforming our benchmark index, the Numis Smaller Companies
plus AIM (excluding Investment Companies) Index, which fell by -0.9%(1). The
long book generated 0.7%(1) and the short book generated 0.6%(1) of gross
performance.

This was a strong month for the Company in absolute and relative terms,
particularly in the context of wider equity market falls, with the Company
benefitting from stock specific alpha driven by positive updates from some of
our core long holdings, and also from our short positions which generated a
positive return reflecting falling equity markets and some stock specific
updates.

The largest positive contributor to performance came from our long position in
YouGov, which rose through the month. Some of you may recall that YouGov was
the Company’s single biggest stock detractor last month when the shares fell
in response to what we thought was a good update from the company, so we
really see May’s performance as a reversal of this. The second biggest
contributor was from Watches of Switzerland, a new position for the Company
off the back of extensive due-diligence conducted ahead of the firm’s
decision to float.

The short book delivered a meaningful contribution of 0.6% of positive
performance, with the biggest contributor coming from a UK contractor which
fell heavily in the month on renewed concerns over its balance sheet and cash
generating abilities. We added to this short during the month, and this
particular company has subsequently delivered a material profit warning in
June.

Turning our attention to what hasn’t been so successful for us in the month,
the top 10 detractors individually cost the Company somewhere in the range of
0.1% to 0.2%, so unhelpful but not material. The top two detractors were long
positions, namely Workspace and Bodycote. Neither of these were weak on stock
specific news but reflected increased concerns over the UK (Workspace) or the
global economy (Bodycote).

In summary, May was a challenging month for global stock markets, but the
Company had a positive month in absolute and relative terms which is testament
to company fundamentals triumphing over macro and politics. Escalating trade
tensions clearly present a risk to global growth and potentially to stock
markets, but we feel well positioned to deliver a good investment outcome
whatever happens next. Global cyclical exposure in the long book has been
moderated in recent weeks (despite many structural trends that benefit our
long positions here) and our long book is comprised of many advantaged
business models with robust finances. The pace of industry change isn’t
slowing and multi-year secular trends, like the need for corporates to invest
in digital transformation, show no signs of slowing and benefits many of our
holdings. On the flip side we remain short in financial leverage, and continue
to identify lots of opportunities to short commoditised business with
weakening demand, as well as structurally flawed business models who we
believe will be the first and real victims of any global slowdown. We continue
to operate the portfolio with a lower than average net exposure to the market
of c.100%.

(1)Source: BlackRock as at 31 May 2019

14 June 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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