REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

19/08/2020 12:55

The information contained in this release was correct as at 31 July 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 July 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       3.0      11.1    -1.8     15.9     60.4 
 Share price           2.2       8.8     3.4     37.6     90.3 
 Benchmark*            2.3       7.8    -8.7    -11.6      8.1 

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:                                         568.83p 
 Net asset value incl. income:                                         571.94p 
 Share price                                                           570.00p 
 Premium to cum income NAV                                                0.3% 
 Net yield (1):                                                           1.8% 
 Total Gross assets (2):                                               £478.4m 
 Net market exposure as a % of net asset value (3):                     117.1% 
 Ordinary shares in issue (4):                                      83,643,462 
 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 2020 interim dividend declared on 23 July 2020 and due
to pay on 28 August 2020, 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. Excludes any shares held in treasury (at 31 July 2020 the Company did not
hold any shares in treasury).

5. Calculated as a percentage of average net assets and using expenses,
excluding performance fees, finance costs,  direct transaction costs, custody
transaction charges, and taxation) 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 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                       30.2 
 Financials                        20.1 
 Consumer Services                 19.7 
 Consumer Goods                     9.4 
 Technology                         8.7 
 Health Care                        5.6 
 Telecommunications                 2.9 
 Basic Materials                    2.2 
 Oil & Gas                          0.4 
 Net current assets                 0.8 
                                  ----- 
 Total                            100.0 
                                  ===== 
 Country Weightings   % of Total Assets 
                                        
 United Kingdom                    87.9 
 United States                      7.2 
 France                             1.5 
 Australia                          1.0 
 Netherlands                        0.9 
 Switzerland                        0.4 
 Ireland                            0.3 
 Net current assets                 0.8 
                                  ----- 
 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 
                                                  
 Serco Group                                  3.2 
 Gamma Communications                         2.9 
 YouGov                                       2.9 
 IntegraFin                                   2.8 
 Breedon                                      2.4 
 Dechra Pharmaceuticals                       2.3 
 Games Workshop                               2.3 
 Avon Rubber                                  2.3 
 Chegg                                        2.3 
 Learning Technologies                        2.2 

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

During the month the Company’s NAV per share returned +3.0%(1) (net of
fees), outperforming our benchmark which returned +2.3%(1). It should be noted
that both the long and short book generated a positive return, contributing to
the outperformance versus the benchmark.

Market conditions remained febrile in July as investors swung between hopes of
a recovery from COVID-19 and fears of a second wave. There have been many
attempts to call the top for growth and the bottom for value, but these calls
have generally been incorrect as we believe they often fail to appreciate the
profound structural changes affecting the outlooks for cashflows on a
medium-term basis. As reporting season for Q2 began we have been reassured by
the strong results from many the growth companies that we hold in the Company.
In many cases growth actually accelerated in the second quarter on market
share gains and the wider benefit of changing business and consumer spending
habits.

The largest contributor was Gamma Communications, which delivered upgrades to
consensus forecasts for 2021 on high demand for its products including new
contract wins and low cancellation rates. The unified
communications-as-a-service (UCAAS) market is an industry that we have long
liked for its secular growth prospects, but COVID-19 is undoubtedly
accelerating the structural shift to the cloud within corporate
telecommunications. Similarly, Computacenter, the second biggest contributor,
has seen demand for its products and services increase from the transition to
“working-from home”, as well as the ongoing structural growth of
“digital transformation” an area which corporates continue to prioritise
spend. Other companies reporting strong results contributing to the month’s
performance include Pets at Home, which has seen strong growth in online
orders and IntegraFin, which continues to generate strong net inflows and take
market share.

Turning to detractors, three of the top five were companies we didn’t own
that rose during the month. The largest detractor was Bodycote, which fell
amidst wider weakness in Industrials, but did deliver interim results that
were modestly ahead of expectations, highlighting a robust margin and cash
performance despite weaker volumes. Whilst many of Bodycote’s end markets
remain challenged in the near term, we think Bodycote is an advantaged company
and is well placed to benefit as and when end global demand recovers, whilst
the restructuring being undertaken now should point to higher margins on
recovered volumes in the future. Shares in IWG were also weak during the
month, and while this was not related to any stock specific newsflow, our
thinking over IWG’s end market has evolved and we have taken the decision to
exit the position.

Standing back from July’s performance, what has been remarkable about this
crisis is the level of dispersion of financial performance that it has created
across industries and companies. There is evidence of accelerating rates of
growth and decline in several specific industries as well as within specific
companies. Understandably the outlook remains uncertain, but that is an
opportunity rather than a problem for the Company. There remain sizeable
opportunities for companies that can differentiate themselves, while the
pressure on balance sheets and cashflows for struggling companies is
intensifying. The gross exposure is currently c.119% while the net is around
115%, which reflects the reduced number of short positions which the Company
currently holds. Overall, we remain positive on the opportunity set that this
crisis has generated, and the ability of the Company to capitalise on these
opportunities. We thank shareholders for your ongoing support.

(1)Source: BlackRock as at 31 July 2020

19 August 2020

ENDS

Latest information is available by typing www.blackrock.com/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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