REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

24/06/2022 12:45

The information contained in this release was correct as at 31 May 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 May2022 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      -4.1     -12.7   -22.9     22.2     39.3 
 Share price          -2.9     -16.6   -27.8     24.5     57.8 
 Benchmark*           -1.7      -2.6   -11.7     20.8     17.6 

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:                                          666.45p 
 Net asset value incl. income:                                          672.58p 
 Share price                                                            635.00p 
 Discount to cum income NAV                                                5.6% 
 Net yield (1):                                                            1.7% 
 Total Gross assets (2):                                                £690.2m 
 Net market exposure as a % of net asset value (3):                      101.5% 
 Ordinary shares in issue (4):                                      102,615,194 
 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 594,670 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                           28.0 
 Consumer Discretionary                22.8 
 Financials                            18.8 
 Technology                             7.1 
 Health Care                            6.9 
 Consumer Staples                       4.3 
 Telecommunications                     3.4 
 Basic Materials                        1.9 
 Energy                                 0.3 
 Net Current Assets                     6.5 
                                      ----- 
 Total                                100.0 
                                      ===== 
                                            
 Country Weightings       % of Total Assets 
                                            
 United Kingdom                        93.3 
 United States                          5.0 
 France                                 1.5 
 Australia                              0.7 
 Germany                               -0.5 
                                            
                                      ----- 
 Total                                100.0 
                                      ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.08.21   30.11.21   28.02.22   31.05.22  
                          %          %          %          % 
 Long                 119.4      121.3      121.8      104.8 
 Short                  2.4        2.7        2.3        3.3 
 Gross exposure       121.8      123.9      124.1      108.1 
 Net exposure         117.0      118.6      119.5      101.5 

   

 Ten Largest Investments                            
                                                    
 Company                    % of Total Gross Assets 
                                                    
 Gamma Communications                           3.4 
 Electrocomponents                              3.2 
 CVS Group                                      3.0 
 Watches of Switzerland                         3.0 
 Auction Technology Group                       2.8 
 Oxford Instruments                             2.8 
 YouGov                                         2.7 
 WH Smith                                       2.5 
 Dechra Pharmaceuticals                         2.3 
 Impax Asset Management                         2.2 

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

The Company returned -4.1%(1) during May, underperforming its benchmark, the
Numis Smaller Companies + AIM ex Investment Companies, which returned
-1.7%(1).  Many of the strongest areas of the market were either in energy
related sectors, or those deemed to be the most defensive as investors
continued to grapple with the fear of an economic slowdown.

Similar to the trend that we have highlighted in recent monthly updates, UK
small & mid-caps continued to be aggressively sold during May, we feel largely
regardless of their end exposure as companies. The largest detractor was
IntegraFin, a UK wealth management platform for advisers, which did disappoint
the market over their guidance for costs. The major feature of this business
should be high levels of recurring (and growing) revenues and this has indeed
been true. However, the company has felt it necessary to take a step up in
operating spend to deliver best in class service and so margins will need to
fall back from the mid 40% range. This should not really change the
fundamental long term investment case, but it is a disappointment given
previous statements on cost control, and we have reduced the position. Shares
in Treatt, the ingredients manufacturer, fell after reporting a fall in
profits compared to the same period last year despite reporting positive sales
growth. SigmaRoc, another UK mid cap industrial that has been sold off
although profits continue to grow and therefore, we continue to hold the
position.

The top contributor was Auction Technology Group – a company which had been
a detractor in recent months but released a strong set of results and an
outlook statement that was better than expected, with the company indicating
double digit revenue growth to continue this year. The shares therefore
rebounded and we think are excellent value. Another share that rebounded this
month was Baltic Classified Group however, this company is yet to report its
results and we shall have to wait another month to see how trading has fared.
Nevertheless, with its strong market position and margins over 70% we believe
it should fare well. YouGov also rebounded during May, despite the company not
reporting any results, and therefore we think the share price moves reflect
the high quality, more defensive nature of the business.

Overall, this has been a very ‘macro’ month and year to date. When looking
at individual company results and looking at the state of profit and loss and
balance sheets, we are often struck by just how much protection and upside
there is, which is why we have retained our exposure and remain modestly net
long. Acknowledging the heightened levels of uncertainty and recognising that
strong numbers aren’t translating into instant share price recovery in this
market back drop we reduced the gross exposure to c.115% and the net exposure
to around 104%. We still believe many of our longs are already pricing in very
bearish scenarios (indeed as some of our shorts have now been reduced) and we
continue to believe in the ability of many of our long positions to grow
double-digit over many years, names that our now trading on free cash flow
yields of 4-5% and as such representing significant value for us. It would
seem many of the Management teams agree judging by the size of share buyback
programmes that have been commenced in recent weeks, and as we have
articulated before, we own many companies where a sizeable percentage of
market cap is in net cash. We understand that the year to date has been a
painful period for our shareholders and we appreciate your ongoing support,
and we can assure you that our confidence in the recovery in our long book is
undiminished and we remain of the view there is significant upside to come in
time.

(1)Source: BlackRock as at 31 May 2022

24 June 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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