REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

22/07/2019 14:30

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 30 June 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       0.9       7.8    -3.8     73.1     92.5 
 Share price           6.4      11.9     3.1    103.2    123.2 
 Benchmark*           -0.6       2.6    -7.2     28.6     32.6 

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:                                         574.17p 
 Net asset value incl. income:                                         579.50p 
 Share price                                                           566.00p 
 Discount to cum income NAV                                               2.3% 
 Net yield (1):                                                           1.8% 
 Total Gross assets (2):                                               £423.8m 
 Net market exposure as a % of net asset value (3):                      99.7% 
 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                 27.4 
 Industrials                       22.9 
 Financials                        21.8 
 Consumer Goods                     8.4 
 Health Care                        6.9 
 Technology                         6.1 
 Basic Materials                    2.2 
 Telecommunications                 1.5 
 Net current assets                 2.8 
                                  ----- 
 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 
                                                  
 4imprint Group                               3.1 
 YouGov                                       3.0 
 Dechra Pharmaceuticals                       3.0 
 SSP                                          2.9 
 JD Sports Fashion                            2.9 
 IntegraFin                                   2.7 
 Aveva                                        2.6 
 Bodycote                                     2.6 
 Serco                                        2.5 
 Watches of Switzerland                       2.4 

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

During June the Company’s NAV per share rose by 0.9%(1) to 579.50 on a cum
income basis, outperforming our benchmark index, the Numis Smaller Companies
plus AIM (excluding Investment Companies) Index, which fell by -0.6%(1). The
long book generated 0.1%(1) and the short book generated 0.8%(1) of gross
performance.

June was an eventful month for the stockmarket and the Company, with increased
volatility, market swings from risk-on to risk-off and mini style reversals.
Against this backdrop our benchmark finished down for the month, however
thanks to some key stock specific wins, particularly in the short book, the
Company was able to deliver another positive month in both absolute and
relative terms.

This biggest stock contributor was from a short position in a UK contracting
firm that collapsed on a huge profit warning. This company is now down circa
+70% YTD having already fallen +70% in 2018, which vindicates our decision to
add to this position in recent months. It is all too tempting to close shorts
after material share price falls, particularly when they may appear
“cheap” and with so many people who want to tell you they are “cheap”,
but there are times when real conviction in one’s analysis is required, and
the resolve to add to the short.

Aveva continued to rise following strong results released at the end of May,
while the shares received a further boost during the month following its
promotion into the FTSE 100 Index. Shares in Sumo Group rose after the company
delivered a positive trading update at its AGM, reiterating confidence for the
remainder of 2019 with upgrades to guidance.

The largest detractor during the month was our position in Craneware which
issued a profit warning on the last day of the month. This is a UK listed
software company focused on the US healthcare market which has a very high
percentage of recurring revenues, so the miss versus expectations was related
to a shortfall in new contract wins which the management attribute to poor
sales execution rather than any change in the competitive landscape. We have
discussed the issues at length with management; if their explanations are
correct then the issues are transient, remedial actions are in place, and this
should have little impact on the long term earnings power of the company.

June was a month where stock specifics drove performance of the Company on
both the long and the short side. Against the backdrop of a falling market our
ability to generate stock specific alpha from long positions that can see
strong share price moves regardless of the direction of the market is
precisely the reason why we always highlight the importance of focusing on
company fundamentals. This is just as true on the short side. While a falling
market will clearly be helpful to many short positions, it is far more
rewarding, both financially and intellectually, when a short thesis plays out
as predicated. The above is a short summary, but we were encouraged by the
number of stock specific wins that we had during the month, and recent updates
from a number of our holdings continue to support our invest thesis, and we
therefore remain confident in our positioning and our ability to continue to
deliver regardless of what happens next with the market or the macro
environment. Our net exposure remains around 100% which as mentioned
previously is lower than historical average levels.

(1)Source: BlackRock as at 30 June 2019

22 July 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.



Copyright (c) 2019 PR Newswire Association,LLC. All Rights Reserved