REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

29/05/2020 11:00

 BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 30 April 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      13.8     -22.9    -7.5      8.4     55.8 
 Share price          13.9     -23.2    -1.8     37.0     97.6 
 Benchmark*           13.2     -22.2   -16.5    -15.7      4.7 

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:                                         512.72p 
 Net asset value incl. income:                                         516.96p 
 Share price                                                           526.00p 
 Premium to cum income NAV                                                1.7% 
 Net yield (1):                                                           1.9% 
 Total Gross assets (2):                                               £432.1m 
 Net market exposure as a % of net asset value (3):                     111.7% 
 Ordinary shares in issue (4):                                      83,588,462 
 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 2019 final dividend declared on 06
February 2020 and paid on 27 March 2020.

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 0 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
2019.

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 
                                        
 Industrials                       30.3 
 Consumer Services                 19.3 
 Financials                        17.9 
 Consumer Goods                    12.5 
 Technology                         8.3 
 Health Care                        7.0 
 Telecommunications                 2.7 
 Basic Materials                    1.8 
                                        
 Net current assets                 0.2 
                                  ----- 
 Total                            100.0 
                                  ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.05.19   31.08.19   30.11.19   29.02.20  
                          %          %          %          % 
 Long                 113.7      109.1      103.2      119.3 
 Short                 13.2       11.2        7.4        8.9 
 Gross exposure       126.9      120.3      110.6      128.2 
 Net exposure         100.5       97.9       95.8      110.4 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 YouGov                                       3.1 
 Breedon                                      3.0 
 IntegraFin                                   2.9 
 Serco Group                                  2.9 
 Dechra Pharmaceuticals                       2.7 
 Gamma Communications                         2.7 
 Games Workshop                               2.4 
 Watches of Switzerland                       2.3 
 Qinetiq Group                                2.2 
 Bodycote                                     2.0 

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

During the month the Company returned 13.8% (net of fees), outperforming our
benchmark which returned 13.2%. The positive performance was generated by the
long book, with the short book detracting modestly (circa 0.5%).

Equity markets rebounded during April as news flow surrounding COVID-19 showed
signs of improvement, with many countries appearing to have passed the peak
and taking steps to lift restrictions. Meanwhile monetary support continued to
provide liquidity to financial markets, with governments around the world
signalling the intention to use a wide variety of measures to stimulate
economic activity, which is being significantly impacted by lockdowns.

Whilst the long book benefited from the reversal in performance of many shares
that were impacted during the initial market sell-off back in March, our short
book also experienced a similar effect. It is often the case that in the early
stages of a recovery/rebound, our shorts recover faster than our longs,
vindicating our decision to close a number of shorts in late March / early
April.

Two of the largest contributors to performance came from holdings in Consumer
Services, a sector that has been impacted by Government lockdowns. Games
Workshop, the creator of the Warhammer miniatures game, rose in response to a
positive trading update where the company confirmed that online orders would
recommence in May following assessments to ensure health and safety for staff.
Shares in luxury watch retailer, Watches of Switzerland, also rallied from
their March lows. While sales in airport outlets will undoubtedly be impacted
by travel disruption, we believe this is a market where long-term demand
exceeds supply and we believe Watches of Switzerland has built itself an
advantaged market position.

Companies at the forefront of digital transformation have fared particularly
well. This is an industrial trend we have highlighted before and remains a key
investment proposition for the Company. Looking forward, we expect an
acceleration in digitisation across many business verticals (niche businesses
serving a specific audience) and we have deliberately sought to increase
exposure to this multi-year secular trend across digital payments,
software-as-a-service, unified communications, and exchanges to name but a
few. Our holding in Gamma Communications, a UK leader in unified
communications-as-a-service, was a top contributor during the month, and we
expect the company to continue to benefit from this trend.

There are little conclusions to be drawn from detractors during the month,
with many simply being companies that failed to keep pace with the market
rally or those which gave back some relative outperformance from the prior
month, for example, Team17 which was the largest positive contributor during
March. Similarly, Qinetiq and Serco both underperformed during the month,
which we would attribute to these businesses being more defensive.

The economic backdrop remains highly uncertain as a result of the ongoing
COVID-19 pandemic. We are continuing to engage with companies to understand
the trends and impacts to the industries in which they operate, and how
Management teams expect to deal with this disruption. We believe that this
crisis is likely to see an acceleration of some secular industry trends,
notably to the benefit of digital-ready businesses and businesses that enable
the digital transformation. Other companies with strong financial footing with
a differentiated product offering should be able to use this market disruption
to their long-term advantage, as and when competitors and capacity exit the
market. Therefore, we do not expect to alter the positioning of the portfolio
materially but are always looking to add or remove individual holdings where
our latest research suggests there is change occurring. We continue to operate
with a lower gross exposure than usual given the ongoing market volatility but
have started to increase our net exposure in recent weeks as we have
reduced/taken profits in a number of shorts that had fallen a long way. We
continue to thank shareholders for their ongoing support.

29 May 2020

(1)Source: BlackRock as at 30 April 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.



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