REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

23/12/2020 14:50

The information contained in this release was correct as at 30
November 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 30 November 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      10.2      11.9     9.1     32.1     89.8 
 Share price           9.3      10.2     8.2     57.3    121.2 
 Benchmark*           11.1      10.9     3.8      2.0     31.4 

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:                                         675.61p 
 Net asset value incl. income:                                         681.23p 
 Share price                                                           682.00p 
 Premium to cum income NAV                                                0.1% 
 Net yield (1):                                                           1.5% 
 Total Gross assets (2):                                               £596.2m 
 Net market exposure as a % of net asset value (3):                     118.6% 
 Ordinary shares in issue (4):                                      87,518,929 
 2019 ongoing charges (excluding performance fees) (5,6):                0.59% 
 2019 ongoing charges ratio (including performance fees) (5,6,7):        1.75% 

1. Calculated using the 2020 interim dividend declared on 23 July 2020 and
paid on 26 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. 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                       32.4 
 Consumer Services                 18.2 
 Financials                        17.3 
 Consumer Goods                    10.1 
 Technology                         9.6 
 Health Care                        6.9 
 Telecommunications                 2.5 
 Basic Materials                    2.5 
 Net current assets                 0.5 
                                  ----- 
 Total                            100.0 
                                  ===== 
                                        
 Country Weightings   % of Total Assets 
                                        
 United Kingdom                    87.7 
 United States                      7.5 
 France                             2.3 
 Australia                          0.9 
 Switzerland                        0.8 
 Denmark                            0.4 
 Netherlands                        0.3 
 Israel                             0.1 
                                  ----- 
 Total                            100.0 
                                  ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  29.02.20   31.05.20   31.08.20   30.11.20  
                          %          %          %          % 
 Long                 119.3      118.6      121.0      120.4 
 Short                  8.9        2.1        2.4        1.9 
 Gross exposure       128.2      120.7      123.4      122.3 
 Net exposure         110.4      116.6      118.6      118.6 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Games Workshop                               3.3 
 YouGov                                       2.8 
 Watches of Switzerland                       2.8 
 Gamma Communications                         2.5 
 Breedon                                      2.4 
 Pets at Home                                 2.4 
 Avon Rubber                                  2.2 
 Dechra Pharmaceuticals                       2.2 
 Impax Asset Management                       2.1 
 IntegraFin                                   2.0 

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

During the month the Company returned 10.2%(1) (net of fees), modestly
trailing our benchmark which returned 11.1%(1). The long book delivered a
positive return during the month, while the short book detracted marginally.
November marks the end of the Company’s financial year, and despite what has
been a difficult 12 month period to say the least, we are pleased to report
that the Company delivered a positive 9.1%(1) net return over the period,
outperforming our benchmark by +5.3%(1).

November was an extreme month. It included several major events including the
US election, a return to national lockdowns in several European countries
(including the UK), followed by the significant announcement of effective
vaccines against COVID-19. Global stock markets were initially weak on
lockdowns, but very quickly surged after the US election and particularly
after the announcement of the >90% efficacy of the Moderna vaccine. What
particularly characterised the nature of the stock market rise in November was
the extremely strong reversal towards value and away from growth shares. And
therefore, while many global indices rose more than 10% in the month, the skew
within these indices was substantially towards the sectors that had been
hardest hit in the year (leisure, travel, oil and financials).

Despite marginally trailing our benchmark, we feel that considering the
headwind to our strategy from the quantum of the “growth-value” reversal
witnessed during the month, most particularly acute in the UK market, we think
the overall result is respectable. We would also highlight that the decision
taken earlier during the year to close a number of our short positions,
thereby locking in some profit, was beneficial during the market rally this
month.

Many of the largest detractors to performance during the month were companies
that were caught by the market rotation, rather than being impacted by any
stock specific issues. The largest detractor was Games Workshop, which we
think simply fell back as investors took profits to fund the purchases of
“value” stocks as the rotation took hold. This was despite another big
upgrade delivered in the month, and to illustrate our point, with a c.15%
upgrade to profits and a c.15% fall in the share price, Games Workshop is now
30% cheaper now than at the start of the month, and yet we have even more
conviction in its outlook. The same “profit taking” dynamic led to YouGov
appearing among the top detractors in the month. We’ve used the weakness to
add to our positions in both companies.

The largest positive contributor to performance was Watches of Switzerland
which continued to rise after their incredibly strong trading update in
October (when it was also a large contributor to performance). Shares in Trade
Desk rose after reporting strong third quarter results which were ahead of
expectations, showing that net income had more than doubled year-on-year,
resulting in upgrades to forward guidance. Within Travel & Leisure our
holdings in Whizz Air and Jet2 rallied on hopes of increased international
travel once a vaccine begins to be rolled out.

There has been much discussion about whether this is now the end of growth. We
do not share this view. As discussed in previous communications, we believe
that the powerful structural trends we have identified at industry levels will
continue and the companies that lead in these areas should be able to deliver
double digit compound growth for many years to come. We believe this will
translate into rising share prices as valuations are not stretched, especially
in light of super low interest rates and the new doses of monetary stimulus
that are being widely promised. We are watchful of inflation but overall, we
expect rises in inflation, if they occur, to be tolerated by monetary
authorities rather than aggressively curtailed. Therefore, we continue with a
central expectation that rates will stay low and that genuinely cash
generative growth companies remain highly differentiated and highly
attractive. We see November as a small set back, understandable if not
desirable in light of the rapid changes of events and the scale of market
reactions. We remain confident in the holdings in the portfolio, and those
that have retraced in November we see as merely a pause in a long-term upward
path and remain very positive on their prospects. We have therefore used share
price weakness to add to a number of our core holdings and we look to the
future with high conviction in the portfolio.

(1)Source: BlackRock as at 30 November 2020

23 December 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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