REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

20/02/2023 17:45

The information contained in this release was correct as at 31 January 2023. 
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 January2023 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       5.6      14.7   -20.2      0.3     24.1 
 Share price           7.1      14.6   -22.8     -4.3     41.0 
 Benchmark*            5.0      10.0   -12.4      5.5      8.4 

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:                                          639.52p 
 Net asset value incl. income:                                          651.86p 
 Share price                                                            635.00p 
 Discount to cum income NAV                                                2.6% 
 Net yield (1):                                                            1.7% 
 Total Gross assets (2):                                                £659.1m 
 Net market exposure as a % of net asset value (3):                      104.8% 
 Ordinary shares in issue (4):                                      101,113,864 
 2022 ongoing charges (excluding performance fees) (5,6):                 0.54% 
 2022 ongoing charges ratio (including performance fees) (5,6,7):         0.54% 

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 2,096,000 shares held in treasury.
5. The Company’s ongoing charges are calculated as a percentage of average
daily net assets and using the management fee and all other operating
expenses, excluding performance fees, finance costs, direct transaction
charges, VAT recovered, taxation and certain other non-recurring items for the
year ended 30 November 2022.
6. With effect from 1 August 2017 the base management fee was reduced from
0.70% to 0.35% of gross assets per annum. The Company’s ongoing charges are
calculated as a percentage of average daily net assets and using the
management fee and all other operating expenses, including performance fees,
but excluding finance costs, direct transaction charges, VAT recovered,
taxation and certain other non-recurring items for the year ended 30 November
2022.
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                           32.7 
 Consumer Discretionary                23.0 
 Financials                            13.9 
 Technology                             6.0 
 Health Care                            4.4 
 Consumer Staples                       4.2 
 Telecommunications                     3.0 
 Energy                                 1.9 
 Basic Materials                        1.1 
 Information Technology                 1.1 
 Real Estate                            0.4 
 Communication Services                 0.4 
 Net Current Assets                     7.9 
                                      ----- 
 Total                                100.0 
                                      ===== 
                                            
 Country Weightings       % of Total Assets 
                                            
 United Kingdom                        93.6 
 United States                          3.3 
 France                                 2.0 
 Australia                              0.6 
 Netherlands                            0.5 
                                            
                                      ----- 
 Total                                100.0 
                                      ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  28.02.22   31.05.22   31.08.22   30.11.22  
                          %          %          %          % 
 Long                 121.8      104.8      102.0      105.8 
 Short                  2.3        3.3        4.1        2.5 
 Gross exposure       124.1      108.1      106.1      108.3 
 Net exposure         119.5      101.5       97.9      103.3 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Oxford Instruments                           3.3 
 WH Smith                                     3.0 
 Watches of Switzerland                       3.0 
 Gamma Communications                         3.0 
 4imprint Group                               2.9 
 RS Group                                     2.9 
 CVS Group                                    2.8 
 Breedon                                      2.6 
 Diploma                                      2.5 
 Ergomed                                      2.5 

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

The Company returned 5.6% in January, outperforming our benchmark, the Numis
Smaller Companies plus AIM (excluding Investment Companies) Index, which rose
5.0%.(1) Equity markets have had a strong start to 2023. As is often the case
there is rarely one single determining factor but a combination of China
reopening, falling headline and core inflation in the US, as well as several
positive corporate updates, all contributed to the increased optimism that a
soft landing is not out of reach. In recent updates we have shared our
thoughts on inflation, and we take comfort from the developments in January
with further falls in energy prices, consumer goods and core services
excluding shelter surprising on the downside.  On the other hand, jobs growth
slowed further but still showed resilience as the unemployment rate fell
unexpectedly to 3.5%, reverting to a historic low. Labour costs slowed for the
third consecutive quarter, signalling that wage inflation is potentially
starting to roll over despite a tight labour market, adding further fuel to
the fire that interest rate hikes are nearing the peak. Specifically, within
the UK, small and mid-cap shares performed strongly buoyed by consumer shares
in particular where we saw much better updates than had been feared. Indeed,
the relentless negative commentary surrounding the UK outlook we now think of
positively given the potential for further upside surprises from UK Corporate
PLC.

Watches of Switzerland was the largest contributor during the month. There was
no stock specific news, but the shares recouped nearly all of December’s
losses (it was the biggest detractor to performance in December despite
publishing very strong results which we discussed last month). Grafton shares
rallied after a very positive update in January confirming a solid finish to
the year with revenues growing 9% and profit growth exceeding market
expectations. Trends in the final two months of the year were better than
expected, particularly in Ireland, although the volume performance in the UK
also improved at the end of the year. Whilst we acknowledge the near-term
cyclical risk at Grafton, we believe the business to have a strong competitive
market position, a long track record of share gains which we see continuing,
and of course a very strong net cash balance sheet. Shares in Dunelm rose
after the company reported positive growth in both online and in store sales,
with upgrades to full-year profits guidance.

On the negative side, two of the largest detractors were Ergomed and YouGov,
both which provided decent trading updates but the shares fell marginally
during the course of the month. Ergomed reported very strong trading across
all divisions for the 12 months to 31 December 2022, with a positive outlook
as its order book continues to grow, providing a high level of revenue
visibility in the coming years. YouGov also provided a trading update
highlighting continued growth across most divisions and regions, particularly
in the US. The company continues to invest in its technology and remains
“cautiously optimistic” in the full year outlook despite the challenging
macroeconomic environment. Shares in Auction Technology Group has been
relatively weak after a slightly mixed trading update at the end of last year,
and in the absence of a large beat, the shares have been negatively impacted.

We continue to look to the year ahead with cautious optimism. In general,
corporate updates are continuing to deliver positive surprises, particularly
where expectations are so low (notably UK consumer and light industrial) which
leaves the door wide open for further positive surprises in our mind. We also
take some comfort that in recent weeks we’ve seen strong corporate/
financial delivery rewarded with rising share prices, unlike most of last
year, which bodes well for our investment process more generally and indeed
our long book. A combination of rising share prices and changing industry
patterns and customer behaviour has given us more confidence in the
opportunity set within the short book. As a consequence of the above, we’ve
been adding new positions (both long and short) to the Trust in recent weeks.
We don’t think the next few months will be easy, but we feel increasingly
more confident on our positioning and process. The gross of the Company
remains c.105% with the net around 102%. We thank shareholders for their
ongoing support.

(1)Source: BlackRock as at 31 January 2023

20 February 2023

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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