REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

20/09/2022 07:15

The information contained in this release was correct as at 31 August 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 August2022 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      -6.5      -9.4   -38.8      8.0     23.4 
 Share price         -11.0     -10.6   -44.1      2.6     38.2 
 Benchmark*           -3.9      -8.7   -22.6     13.9      6.6 

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:                                          599.45p 
 Net asset value incl. income:                                          606.83p 
 Share price                                                            565.00p 
 Discount to cum income NAV                                                6.9% 
 Net yield (1):                                                            1.9% 
 Total Gross assets (2):                                                £617.6m 
 Net market exposure as a % of net asset value (3):                       97.9% 
 Ordinary shares in issue (4):                                      101,770,678 
 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 2022 interim dividend declared on 20 July 2022 and
paid on 26 August 2022, 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 1,439,186 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                           28.5 
 Consumer Discretionary                20.8 
 Financials                            12.8 
 Health Care                            7.1 
 Technology                             6.4 
 Consumer Staples                       4.1 
 Telecommunications                     3.0 
 Energy                                 1.4 
 Basic Materials                        0.6 
 Communication Services                 0.4 
 Net Current Assets                    14.9 
                                      ----- 
 Total                                100.0 
                                      ===== 
                                            
 Country Weightings       % of Total Assets 
                                            
 United Kingdom                        93.6 
 United States                          4.0 
 France                                 1.7 
 Australia                              0.8 
 Germany                               -0.1 
                                            
                                      ----- 
 Total                                100.0 
                                      ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  30.11.21   28.02.22   31.05.22   31.08.22  
                          %          %          %          % 
 Long                 121.3      121.8      104.8      102.0 
 Short                  2.7        2.3        3.3        4.1 
 Gross exposure       123.9      124.1      108.1      106.1 
 Net exposure         118.6      119.5      101.5       97.9 

   

 Ten Largest Investments                            
                                                    
 Company                    % of Total Gross Assets 
                                                    
 RS Group                                       3.6 
 CVS Group                                      3.1 
 Watches of Switzerland                         3.0 
 Gamma Communications                           3.0 
 Oxford Instruments                             2.8 
 Auction Technology Group                       2.6 
 WH Smith                                       2.5 
 Ergomed                                        2.4 
 Computacenter                                  2.4 
 4imprint Group                                 2.3 

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

The Company returned -6.5%(1) during August, while the Numis Smaller Companies
plus AIM (excluding Investment Trusts) benchmark fell -3.9%(1).
Underperformance during the month was driven by the long book while our short
book made a small positive contribution to relative performance.

For the first half of August stock markets continued to rise/stabilise, but
then fell back sharply at the end of the month as energy prices rose again
(notably gas and electricity prices in Europe rather than global oil prices)
and then as the Federal Reserve Chair, Jerome Powell made another particularly
hawkish speech inferring large rate rises could still happen. This speech then
catalysed a sell-off in equities and by the end of August most indices were
down for the month – for instance the FTSE 250 Index was down circa 5%. As a
counterpoint, the energy heavy and large cap FTSE 100 Index was down only 1%.

As has been the case recently the volatile nature of share prices means that
contributors one month can flip the next. The largest detractor was therefore
the holding in Auction Technology Group, which reversed gains from the prior
month, despite no deterioration in trading and the company recently reporting
strong results with a very positive outlook for this year. Other notable
detractors were SigmaRoc and Watches of Switzerland which fell on no stock
specific news. Shares in XP Power fell after the company warned that full year
results would come in at the lower end of analyst expectations due to supply
chain challenges impacting their ability to deliver to customers and in turn
the timing of booking revenues.

There was a broad mix on the positive side during August. The largest
contributor was the holding in RS Group whose shares had been supported by
good results in July and then made a small acquisition in early August with
attractive characteristics. The second largest contributor was the long
position in 4imprint which had extremely strong results and uplifted profit
expectations for the second time this year as their marketing is stimulating
demand growth. The third largest contributor was a short in a UK building
products group which fell after a weak update prompting analyst downgrades to
forecasts.

Overall, the particularly hawkish speech from Powell was clearly a
disappointment to the market given the already lower rates of inflation
witnessed in the July CPI (Consumer Price Index) print as well as the
observably lower oil price. However, we do not think his speech will
fundamentally change the nature of the positioning we have taken and expressed
in recent correspondence. Whilst the consumer undoubtedly faces some
challenges, we must be mindful that not all consumer shares are equal, and
amidst this turbulent market and uncertain backdrop there are several
compelling valuations for differentiated consumer shares that have strong
product offerings and market share potential despite near term demand
pressures.  There are a number of consumer facing shares on single digit
price to earnings ratios, with high FCF (free cash flow) yields and where a
sizeable percentage of market capitalisation is in net cash.

We remain confident in the holdings in the portfolio, which are well financed
businesses, with enduring long term organic growth prospects that will use
this period to enhance their position to win more market share. And while we
wait for this to play out, we take comfort from the increasing number of
company buybacks we are witnessing as Management teams retire their equity at
current valuations, and furthermore the scale of M&A activity that we are
witnessing in the UK market as strategic buyers take advantage of the
depressed valuations and discount offered from weakness in Sterling. The gross
is around 101% and the net is 98%.  We thank shareholders for your ongoing
support.

(1)Source: BlackRock as at 31 August 2022

20 September 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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