REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

29/03/2023 17:45

The information contained in this release was correct as at 28 February
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 28 February2023 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      -0.5       3.6   -15.4     11.0     26.1 
 Share price           0.9       7.7   -15.5     12.0     41.9 
 Benchmark*            0.4       4.3    -7.5     17.2     12.5 

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:                                          637.88p 
 Net asset value incl. income:                                          640.35p 
 Share price                                                            632.00p 
 Discount to cum income NAV                                                1.3% 
 Net yield (1):                                                            1.8% 
 Total Gross assets (2):                                                £647.5m 
 Net market exposure as a % of net asset value (3):                      108.0% 
 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 2022 final dividend declared on 10
February 2023 and payable on 31 March 2023.

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                           33.2 
 Consumer Discretionary                23.3 
 Financials                            15.7 
 Technology                             7.8 
 Health Care                            4.1 
 Consumer Staples                       3.8 
 Telecommunications                     3.0 
 Energy                                 1.9 
 Basic Materials                        1.3 
 Communication Services                 0.8 
 Real Estate                            0.4 
 Net Current Assets                     4.7 
                                      ----- 
 Total                                100.0 
                                      ===== 
                                            
 Country Weightings       % of Total Assets 
                                            
 United Kingdom                        94.0 
 United States                          2.4 
 France                                 1.8 
 Netherlands                            0.7 
 Australia                              0.6 
 Ireland                                0.5 
                                            
                                      ----- 
 Total                                100.0 
                                      ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  31.05.22   31.08.22   30.11.22   28.02.22  
                          %          %          %          % 
 Long                 104.8      102.0      105.8      110.3 
 Short                  3.3        4.1        2.5        2.3 
 Gross exposure       108.1      106.1      108.3      112.6 
 Net exposure         101.5       97.9      103.3      108.0 

   

 Ten Largest Investments                          
                                                  
 Company                  % of Total Gross Assets 
                                                  
 Oxford Instruments                           3.1 
 Gamma Communications                         3.0 
 WH Smith                                     2.9 
 4imprint Group                               2.9 
 RS Group                                     2.7 
 CVS Group                                    2.7 
 Breedon                                      2.7 
 Diploma                                      2.6 
 Watches of Switzerland                       2.6 
 Grafton Group                                2.6 

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

The Company returned -0.5%(1) in February, underperforming the Company’s
benchmark, the Numis Smaller Companies plus AIM (excluding Investment
Companies) Index which rose by 0.4%.(1)

After a strong start to 2023, February was more mixed. Markets remain
transfixed on inflation data and the path of future interest rates and remains
highly volatile to any perceived changes in either. February demonstrated both
sides of this volatility. The month started with a Jerome Powell press
conference that was widely interpreted as dovish, at the time the US yield
curve implied a peak rate of 4.9% in June. By the end of the month, after a
series of worse than expected inflation statistics and more hawkish noises
from central banks, the yield curve implied a peak rate of 5.4% and the timing
of the peak pushed out 3 months to September 2023. Though the data was less
positive in February, US CPI (Consumer Price Index) still recorded its lowest
year-on-year increase since October 2021 in January at 6.4%. We still think
that inflation has peaked and that the prime contributor to core inflation
today, namely shelter, is a lagging indicator and will begin to decelerate
through the year. Economic activity remains resilient, with continued
resilience in labour markets and in consumer spending, which continues to be
reflected in corporate news flow overall. Furthermore, at the company level,
in the UK and in Europe the body language and general tone from CEOs has
markedly improved in recent months i.e. since the nadir of “Trussonomics”,
reflecting a combination of factors from lower energy costs, further supply
chain improvements, resilient customer demand (corporate and consumer) and
overall just a general feeling that life isn’t quite so bad, so “guarded
optimism” feels far more appropriate right now.

The biggest detractor was Watches of Switzerland, which fell on the back of
their third quarter results.  While the sales growth slowed down in Q3 vs H1,
this was expected and predominantly driven by jewellery, which fell by 2%
mainly on the back of the company’s own decision not to discount and to hold
its price premium vs competition. Luxury watch sales continued to grow at 22%
and the company continued to grow market share in this category with waitlists
for core models continuing to extend. We had a useful call with management
following the statement and they are as confident in the growth outlook as
ever. Following the fall, the shares now trade on a mid-teens multiple of
current year profits, with a net cash balance sheet, and a long runway of
growth, so it remains a core holding. Not owning oil services business John
Wood Group detracted from relative performance as the shares rallied in
response to a bid from Apollo Global Management, which the subsequently
rejected. Shares in D2C retailer of swimming pool supplies in the US,
Leslie’s Inc fell in response to soft quarter results. The challenging
economic backdrop has impacted discretionary demand, and rising costs have
created an additional challenge, however management did reiterate guidance for
the full year.

The largest positive contributor to performance was homeware retailer, Dunelm
which reported strong sales growth in its first half, which are more than 40%
higher than pre-pandemic levels. Management highlighted the unpredictable
outlook, however guidance remained unchanged as they believe the business will
be well placed to continue to drive growth through market share gains and
emerge from this challenging period in a stronger position. Shares in Oxford
Instruments continued to move higher, benefiting from the positive sentiment
towards industrials, and Baltic Classifieds rose into the end of the month
despite no stock specific newsflow.

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, particularly amongst financially
leveraged companies. As a result, 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 Trust is c.110% with the net around 106%. We thank
shareholders for their ongoing support.

(1)Source: BlackRock as at 28 February 2023

29 March 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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