REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

24/02/2020 17:10

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 January 2020 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      14.2    32.9     62.1    118.8 
 Share price           0.6      18.1    44.0    104.2    169.5 
 Benchmark*           -2.1       9.5    13.5     18.3     45.7 

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:                                         670.61p 
 Net asset value incl. income:                                         678.05p 
 Share price                                                           692.00p 
 Premium to cum income NAV                                                2.1% 
 Net yield (1):                                                           1.5% 
 Total Gross assets (2):                                               £533.2m 
 Net market exposure as a % of net asset value (3):                     105.4% 
 Ordinary shares in issue (4):                                      78,633,941 
 2019 ongoing charges (excluding performance fees) (5,6):                 0.6% 
 2019 ongoing charges ratio (including performance fees) (5,6,7):         1.8% 

1. Calculated using the 2019 interim dividend declared on 23 July 2019 and
paid on 28 August 2019, 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 1,896,385 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).  On the first day of the financial year outperformance from the
previous financial year (if any) is carried forward and accrued in the daily
NAV released to the London Stock Exchange.

 Sector Weightings         % of Total Assets 
                                             
 Industrials                            26.9 
 Consumer Services                      26.6 
 Financials                             19.7 
 Consumer Goods                         10.5 
 Technology                              6.9 
 Health Care                             6.4 
 Telecommunications                      2.1 
 Basic Materials                         1.5 
                                             
 Net current liabilities                -0.6 
                                       ----- 
 Total                                 100.0 
                                       ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  28.02.19   31.05.19   31.08.19   30.11.19  
                          %          %          %          % 
 Long                 108.7      113.7      109.1      103.2 
 Short                 14.9       13.2       11.2        7.4 
 Gross exposure       123.6      126.9      120.3      110.6 
 Net exposure          93.8      100.5       97.9       95.8 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 IntegraFin                                   3.3 
 Watches of Switzerland                       2.9 
 YouGov                                       2.8 
 4imprint Group                               2.7 
 WH Smith                                     2.7 
 Serco Group                                  2.6 
 Games Workshop                               2.4 
 Dechra Pharmaceuticals                       2.1 
 Gamma Communications                         2.1 
 IWG                                          2.1 

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

The Company delivered a net return of 1.2%(1) during January, with both the
long and short book contributing positive returns. For comparison, our
benchmark, the Numis Smaller Companies plus AIM (excluding Investment
Companies) Index, fell by 2.1%(1), therefore the relative outperformance of
over 3% reflects positive stock specific successes for several of our
positions, both long and short.

January saw a reversal in many areas of the market (domestic retailers, banks,
resources) often described as “value” that rallied strongly in December.
Several retailers delivered profit warnings (due in part to an inability to
manage the prolonged discounting period created by Black Friday and the
resulting pull forward of consumer spend) and reduced forward guidance, and
resources fell on concerns of the health of the global economy. This
environment favours our investment style as we are underweight to these areas
and deliberately focus on companies with strong growth prospects. However, it
is important to note that the returns generated in the month are more to do
with stock specific outcomes than a style bias.

The biggest single stock contributor was Integrafin, which rose after updating
the market that net flows in the most recent period had been stronger than
anticipated, supporting our multi-year thesis that this best-in-class advisor
platform remains well placed to win market share in a growing market. Asset
manager, Liontrust, performed well during the month in response to a positive
trading update showing strong inflows since the start of the financial year.
The acquisition of Neptune provided further diversification to the business
and added £2.7bn in AUM (Assets Under Management), while the sustainable
investment products have been in demand as investors’ appetite for them
continues to build. The third largest contributor to performance was Games
Workshop, the creator of the Warhammer miniatures game, which soared to record
highs in response to very strong half-year results, accompanied by a large
increase in its dividend and upgrades to forward guidance.

The largest detractor to performance during the month was a short position in
a robotics process automation company that rose sharply on the back of a
trading update that revealed revenues had accelerated. The same trading
statement also revealed profits and cash were worse, but the market focused
much more on the improving revenue line and the company’s belief that its
cash position will improve. Despite an upbeat trading update, shares in WH
Smith fell in the month, which we would attribute to general weakness in the
travel and leisure sector on increased concerns regarding the Coronavirus. The
same applies for the global industrial sector, which we believe explains the
weakness in Bodycote.

Whilst recent events surrounding the Coronavirus merit some caution, at this
stage we have not made any changes to the portfolio as a result. Recent
trading statements have generally benefitted the Company’s holdings, where
many of the long-term structural growth themes we have identified are showing
increased momentum. The UK market remains a significant underweight for many
international investors, so any change here post recent political developments
could fuel demand for UK PLC and this combined with a release in corporate
spending (spent wisely) could bode well not only for earnings growth but share
prices too.  We think it is likely that the Government will look to use
fiscal spending to fuel the economy, so we have deliberately sought exposure
to companies we think are well placed to benefit, in addition to increasing
our exposure to housebuilders. As a consequence of these considerations, we
have increased our gross exposure to over 120% and our net exposure to circa
105%, and we continue to approach the year with optimism.

(1)Source: BlackRock as at 31 January 2020

24 February 2020

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) 2020 PR Newswire Association,LLC. All Rights Reserved