REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

01/02/2021 17:25

The information contained in this release was correct as at 31 December
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 December 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       9.6      23.0    13.2     38.6    104.5 
 Share price          12.2      30.5    12.9     69.2    129.5 
 Benchmark*            8.4      21.5     4.9      6.8     41.8 

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:                                         740.02p 
 Net asset value incl. income:                                         746.56p 
 Share price                                                           765.00p 
 Premium to cum income NAV                                                2.5% 
 Net yield (1):                                                           1.3% 
 Total Gross assets (2):                                               £660.9m 
 Net market exposure as a % of net asset value (3):                     120.5% 
 Ordinary shares in issue (4):                                      88,530,000 
 2020 ongoing charges (excluding performance fees) (5,6):                0.60% 
 2020 ongoing charges ratio (including performance fees) (5,6,7):        1.60% 

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                            33.4 
 Consumer Services                      18.7 
 Financials                             17.2 
 Consumer Goods                         11.0 
 Technology                              8.2 
 Health Care                             6.8 
 Telecommunications                      2.8 
 Basic Materials                         2.6 
 Net current liabilities                -0.7 
                                       ----- 
 Total                                 100.0 
                                       ===== 
                                             
 Country Weightings        % of Total Assets 
                                             
 United Kingdom                         88.0 
 United States                           6.9 
 France                                  2.5 
 Australia                               0.8 
 Switzerland                             0.7 
 Denmark                                 0.6 
 Netherlands                             0.4 
 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 (8) 
                                                      
 Games Workshop                                   3.6 
 YouGov                                           3.1 
 Gamma Communications                             2.7 
 Watches of Switzerland                           2.6 
 Electrocomponents                                2.3 
 Breedon                                          2.3 
 Impax Asset Management                           2.3 
 Pets at Home                                     2.2 
 IntegraFin                                       2.1 
 Dechra Pharmaceuticals                           2.0 

(8)These percentages reflect portfolio exposure gained from both equity
holdings and exposure through contracts for difference where relevant.

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

The Company has made a strong start to its financial year, returning 9.6%(1)
(net of fees) and outperforming its benchmark which returned 8.4%(1).
Performance during the month was driven by the long book, while the short book
was broadly flat, which is a creditable outcome against a market which rose
sharply.

Stock markets rose in December, although not at the fast rate of November, and
some of the underlying style rotations that were a particularly extreme
feature of last month were much less pronounced in December. During the month
the rates of COVID-19 infections further accelerated, including the
announcement of a new more virulent strain. There were increased levels of
restrictions on people and businesses globally, but particularly across UK and
Europe. However, stock markets were not negatively affected, which we ascribe
to the high levels of faith in the vaccination programmes that are expected to
drastically improve the virus situation by Easter. On Brexit, there were
swings in negotiations during December, but finally an agreement was reached
at the very end of the month. This is a positive step towards a return to
normality for the UK after so many years of uncertainty, and we think it gives
a particularly positive outlook for UK investments.

Positive contributors to performance came from a broad range of companies
during the month. The largest positive contributor was IMI Mobile, a leading
player in communications software, which soared after the company agreed to a
takeover approach from US listed IT giant, Cisco Systems. We were very excited
by the long-term secular growth prospects for this company, so we are sorry to
see it go, but understand the strategic rationale. Another secular growth area
we like is e-learning, and our second biggest contributor was from Learning
Technologies Group (LTG) which announced the acquisition of privately-owned
eThink Education. This earnings-enhancing deal follows the recent acquisitions
of OpenLMS and eCreators as LTG seek to consolidate their position in the
attractive but fragmented market of open-source learning management, where the
systems can be highly customised to the end user. It was also pleasing to see
both YouGov and Games Workshop in the top contributors during December, with
both sharply reversing the decline from last month’s rotation, vindicating
our decision to add to both in November’s sell-off. In the case of Games
Workshop, we were rewarded with another upgrade to revenues and profits on the
back of continued strong trading.

The largest detractor during the month was Avon Rubber. The shares fell on the
disappointing news that some US Army body armour contracts would not be signed
as quickly as anticipated, which will therefore result in revenues being
delayed. While the delay is disappointing, we continue believe in the
long-term attractions of the business and recent steps taken to increase its
focus on the protection business. Many of the other detractors to performance
during the month were simply companies that we do not own which benefited from
the value rally, which continued during the month.

The agreement of a Brexit trade deal is a reassuring development that allows
investors to regain confidence in the future of investing in the UK. On that
level we think it improves, or at least removes a potential negative from, the
outlook for all investments. The removal of this uncertainty should have a net
positive impact for valuations of UK Plc which have been depressed for some
time. This dynamic gives us added confidence in the return potential from the
UK market, and for the portfolio. However, it is worth reiterating, as we have
done in the past, that this does not structurally change our views how to make
key investments and the positioning of the portfolio - which has always been
driven by research to identify specific company and industry dynamics rather
than timing macro events. Therefore, we will not be making any significant
strategic changes, but we are reassured that the outlook has been clarified.
When combined with the conviction in the outlook for our particular holdings
we are positive about the outlook for returns for UK Plc and specifically for
the Company in 2021, and this is reflected in the portfolio’s current net
exposure, which is now c.120%.

(1)Source: BlackRock as at 31 December 2020

1 February 2021

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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