REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

25/04/2022 11:30

The information contained in this release was correct as at 31 March 2022. 
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 March 2022 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      -2.7     -21.0    -3.8     45.5     72.7 
 Share price          -0.9     -21.9    -4.6     55.4    117.0 
 Benchmark*            0.6     -10.4    -2.1     28.8     29.7 

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:                                          745.85p 
 Net asset value incl. income:                                          749.49p 
 Share price                                                            754.00p 
 Premium to cum income NAV                                                 0.6% 
 Net yield (1):                                                            1.4% 
 Total Gross assets (2):                                                £773.5m 
 Net market exposure as a % of net asset value (3):                      117.3% 
 Ordinary shares in issue (4):                                      103,209,864 
 2021 ongoing charges (excluding performance fees) (5,6):                 0.57% 
 2021 ongoing charges ratio (including performance fees) (5,6,7):         1.38% 

1. Calculated using the 2021 interim dividend declared on 26 July 2021 and
paid on 27 August 2021, together with the 2021 final dividend declared on 07
February 2022 and paid on 31 March 2022.

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
2021.

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                           29.9 
 Consumer Discretionary                22.7 
 Financials                            18.6 
 Technology                             7.8 
 Health Care                            7.2 
 Consumer Staples                       6.2 
 Telecommunications                     3.3 
 Basic Materials                        3.0 
 Net Current Assets                     1.3 
                                      ----- 
 Total                                100.0 
                                      ===== 
                                            
 Country Weightings       % of Total Assets 
                                            
 United Kingdom                        91.8 
 United States                          5.8 
 France                                 1.2 
 Sweden                                 0.9 
 Australia                              0.6 
 Germany                               -0.3 
                                            
                                      ----- 
 Total                                100.0 
                                      ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.05.21   31.08.21   30.11.21   28.02.22  
                          %          %          %          % 
 Long                 121.3      119.4      121.3      121.8 
 Short                  1.5        2.4        2.7        2.3 
 Gross exposure       122.8      121.8      123.9      124.1 
 Net exposure         119.8      117.0      118.6      119.5 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Electrocomponents                            3.7 
 Gamma Communications                         3.3 
 Watches of Switzerland                       3.2 
 IntegraFin                                   2.9 
 YouGov                                       2.6 
 CVS Group                                    2.6 
 Impax Asset Management                       2.6 
 Auction Technology                           2.5 
 Oxford Instruments                           2.5 
 Dechra Pharmaceuticals                       2.4 
                                                  
                                                  

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

The Company returned -2.7%(1) in March, underperforming its benchmark, the
Numis Smaller Companies +AIM (ex Investment Trusts) Index, which returned
0.6%(1). The long book detracted during the month while the short book was
flat.

Financial market conditions remained highly volatile in March. There were
significant falls in equity markets early in the month on fears that the
conflict in Ukraine would widen combined with fears of recession caused by
sharply rising commodity prices. Stock markets then recovered from mid-March
despite the continued conflict, perhaps simply reflecting the extremes of
(low) valuations that had been reached as well as a sense that the conflict
appears now to be geographically limited in scope.

The UK reporting season has generally been solid, and so in our view the share
price dynamics remain about fear of potential future problems rather than a
reaction to actual deterioration in cashflows. We are always working to
identify problems, but in general we continue to believe that supply
constraints and commodity inflation are mitigable and demand / ordering
patterns remain robust as evidenced in recent reporting, and as such we
believe that further proof points of corporate profit progression through the
year will reassure investors and lead to strong reversion of share prices.
Whilst concerns are heightened over a potential weakening demand outlook, it
is important to reinforce that for our investments: 1) companies we own
aren’t seeing this yet (in fact often the contrary); 2) we believe demand
for their products services is structural/defensive (and so will fare far
better than our short positions); and 3) the weak share prices in consumer
related names have moved quickly to price in quite in bearish scenarios in our
view.

The top detractor in the month was Oxford Instruments, although this is not
quite what it initially seems as this simply reflects the price falling back
from its bid premium at the end of last month after Spectris decided it was
unable to progress with its offer. We do not see this as reflecting the
ongoing investment case and retain the holding. Shares in S4 Capital fell
sharply after they revealed a further delay in reporting their financial
results as their auditor was unable to complete their work in time. This is
clearly an unwelcome development, and we are unable to speculate as the range
of outcomes is wide, but we have reduced the holding significantly on this
development. Ongoing concerns around the cost of living crisis in the UK and
falling consumer confidence added pressure to many sectors exposed to
discretionary consumer spending, such as retailers and this saw our holding in
WH Smith fall despite no sign of a deterioration in trading.

The top contributor was Electrocomponents which had another positive update
driving upgrades to analyst forecasts, with strong revenue and profit growth.
Shares in pharmaceutical services specialist Ergomed rose after the company
reported earnings ahead of expectations, benefiting from its global expansion
into a number of countries in Europe and Japan. Ingredients manufacturer
Treatt rallied during March having been impacted by the sell-off in UK small
and mid-cap growth shares earlier in the year.

The investment environment remains challenging, and we are acutely aware of
the job that lies ahead to get back this year track given the headwinds faced
at the beginning of the year.  A clear area of work for us is to identify
companies that will be caught out by changes in demand patterns or cost
dynamics, and we have discussed in previous updates some of the retail and
consumer shorts that we have introduced, and additional names have been added
in March. However, on balance it is worth saying that we do remain positive
that most companies, and certainly those in the long book, are in good shape
with robust fundamentals and will be able to raise prices and can continue to
grow profits this year and in the years to come. Therefore, we remain positive
on the corporate profit outlook, and now more than ever on the potential for
share prices given low starting valuations. Although we have added to a few
holdings where we think there is a good price opportunity, we have not
materially changed the overall fund this month, and so we retain a net of
c.118% which is above normal levels but is indicative of the current
opportunities that we are finding in our universe. We thank shareholders for
your ongoing support during this challenging environment.

(1)Source: BlackRock as at 31 March 2022

25 April 2022

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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