REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

18/06/2020 17:05

The information contained in this release was correct as at 31 May 2020. 
Information on the Company’s up to date net asset values can be found on the
London Stock Exchange Website at:
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html. 

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)

All information is at 31 May 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       6.8      -8.5    -2.4     11.2     57.4 
 Share price           5.3      -6.1     5.7     34.1     84.6 
 Benchmark*            4.3     -10.2   -12.1    -14.5      4.3 

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:                                         547.83p 
 Net asset value incl. income:                                         551.87p 
 Share price                                                           554.00p 
 Premium to cum income NAV                                                0.4% 
 Net yield (1):                                                           1.8% 
 Total Gross assets (2):                                               £461.3m 
 Net market exposure as a % of net asset value (3):                     116.6% 
 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                            31.3 
 Financials                             19.4 
 Consumer Services                      18.8 
 Consumer Goods                         12.0 
 Technology                              7.7 
 Health Care                             6.3 
 Basic Materials                         2.4 
 Telecommunications                      2.4 
                                             
 Net current liabilities                -0.3 
                                       ----- 
 Total                                 100.0 
                                       ===== 
                                             

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.08.19   30.11.19   29.02.20   31.05.20  
                          %          %          %          % 
 Long                 109.1      103.2      119.3      118.6 
 Short                 11.2        7.4        8.9        2.1 
 Gross exposure       120.3      110.6      128.2      120.7 
 Net exposure          97.9       95.8      110.4      116.6 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 IntegraFin                                   2.9 
 YouGov                                       2.9 
 Games Workshop                               2.7 
 Breedon                                      2.7 
 Serco Group                                  2.6 
 Dechra Pharmaceuticals                       2.5 
 Watches of Switzerland                       2.5 
 Gamma Communications                         2.4 
 Avon Rubber                                  2.3 
 Future                                       2.2 

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

During the month the Company returned 6.8%(1) (net of fees), outperforming our
benchmark which returned 4.3%(1). The long book continued to perform well
during the month, generating c.7%, while the short book modestly detracted.
The short book has been particularly volatile recently, and our expectation of
this was why we decided to take advantage of the material share price falls in
March to start locking in profits and to reduce the portfolio’s overall
short exposure in April.

Whilst markets rose in May, the portfolio benefitted from some strong stock
and industry specific updates which aided performance and more importantly
added support to some of the arguments we have put forward recently regarding
the acceleration in digital transformation we expect to occur. Not only has
this benefitted the Company recently, but the scale and speed of these
industrial trends are the most powerful we as a team believe we’ve witnessed
in our professional careers, so the long-term outlook for some of our holdings
we believe is particularly compelling.

A number of the largest contributors to performance were companies benefitting
from the digital migration. For example, Future (a media company that migrates
print assets to online) delivered strong results, and one of our US holdings,
Chegg (an online educational platform) delivered an emphatic “beat and
raise” with revenue growth and subscriber additions both accelerating to
c.35%, comfortably ahead of forecasts, illustrating Chegg’s strong position
in the virtual education operating environment. Away from the theme of digital
transformation, shares in Games Workshop, the creator of the Warhammer
miniatures game continued to recover.

Turning to the month’s top detractors, the biggest detractor was from our
long position in Countryside Properties, which delivered a disappointing
update reflecting a sharp slowdown in land sales. Breedon was also a
detractor, albeit it was a top contributor last month, so we attribute the
recent give back in performance to nothing other than some profit taking. 
Given the markets continual rise during May, most of the largest detractors to
performance were positions that we do not own that rallied through the month,
often from a position of material share price weakness, and we would
generalise these as shares or industries we don’t think have attractive
long-term futures so we are not interested in pursuing them for short-term
positioning reasons. We acknowledge that should the rally in some of these
types of shares persist, that could be a drag on our relative performance, but
we believe it is much better we stick to companies and industries we think
have fantastic long-term futures due to the inherent strength and
differentiation of their business models or the secular trends they are
exposed to, or indeed in some cases leading.

In summary, May was another strong month for the Company, in absolute and
relative terms, and while this has been a challenging period for equity
markets in absolute terms, we are ahead of the benchmark on both a calendar
and financial year to date basis.  We really believe that during the month of
May we have seen some really remarkable company statements supporting some of
our high conviction views about changing industry dynamics. These do suggest
that the level of industry change is probably accelerating at this time, and
so we think that there are some important themes that should deliver well for
the Company over the coming quarters and years. In terms of COVID-19, the
improving newsflow on the virus and the easing of restrictions has the
potential to benefit depressed sectors like Consumer Services and Financials.
There has been a lot of disruption here and so we will have to be particularly
vigilant in distinguishing between short-term share price movements against
the real outlook for the businesses cash earnings. Overall though, we feel
enthused by the positive developments in some key industries as this suggests
that the virus crisis may actually have acted as a catalyst for change and one
which will benefit the portfolio in due course. As a result, we have continued
to add risk back to the portfolio, increasing both the net and gross positions
during the month. We thank shareholders for their ongoing support.

(1)Source: BlackRock as at 31 May 2020

18 June 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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