REG-BlackRock Throgmorton Trust Plc: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

Today 09:15

The information contained in this release was correct as at 30 April 2025. 
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 30 April 2025 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  2.9       -6.4       -4.1     -6.9      29.8      
 Share price      2.7       -8.0       -5.3     -11.0     13.7      
 Benchmark*       2.6       -4.4       0.3      -7.3      35.0      

  

Sources: BlackRock and Deutsche Numis

*With effect from 15 January 2024 the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index to Deutsche Numis Smaller Companies
plus AIM (excluding Investment Companies).

 

 At month end                                                         
 Net asset value capital only:                            603.16p     
 Net asset value incl. income:                            609.90p     
 Share price                                              541.00p     
 Discount to cum income NAV                               11.3%       
 Net yield 1 :                                            3.3%        
 Total Gross assets 2 :                                   £476.2m     
 Net market exposure as a % of net asset value 3 :        101.8%      
 Ordinary shares in issue 4 :                             78,071,864  
 2024 ongoing charges (excluding performance fees) 5,6 :  0.56%       
 2024 ongoing charges ratio (including performance        0.82%       
  fees) 5,6,7 :                                                       

1. Calculated using the Final Dividend declared on 20 February 2025 payable on
11 April 2025, together with the Interim Dividend declared on 24 July 2024
paid on 21 August 2024.

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 25,138,000 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 2024.

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
2023.

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             31.5               
 Financials              24.1               
 Consumer Discretionary  9.6                
 Basic Materials         7.1                
 Technology              6.5                
 Real Estate             3.8                
 Consumer Staples        3.7                
 Health Care             2.3                
 Communication Services  1.5                
 Telecommunications      0.8                
 Energy                  0.6                
                                            
 Net Current Assets      8.5                
                         -----              
 Total                   100.0              
                         =====              
                                            
 Country Weightings      % of Total Assets  
                                            
 United Kingdom          94.9               
 United States           3.8                
 Australia               0.8                
 Canada                  0.5                
                                            
                         -----              
 Total                   100.0              
                         =====              

 

 Market Exposure (Quarterly)                                 
                                                             
                 31.05.24   31.08.24   30.11.24   28.02.25   
                  %          %          %          %         
 Long            114.9      111.7      111.9      117.8      
 Short           2.3        2.7        3.4        4.9        
 Gross exposure  117.2      114.4      115.3      122.7      
 Net exposure    112.6      109.0      108.5      112.9      

 

 Ten Largest Investments                             
                                                     
 Company                    % of Total Gross Assets  
                                                     
 Tatton Asset Management    3.1                      
 GPE                        3.0                      
 Bellway                    3.0                      
 Rotork                     3.0                      
 Breedon                    2.8                      
 XPS Pensions Group         2.8                      
 IntegraFin                 2.8                      
 Grafton Group              2.5                      
 Morgan Sindall             2.5                      
 Alpha Group International  2.4                      

 

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

 

The Company returned 2.9% in April, outperforming its benchmark, the Deutsche
Numis Smaller Companies +AIM (excluding Investment Companies) Index, which
returned 2.6%.(1)

 

April was dominated by global trade policy with President Trump's
‘Liberation Day’ announcements of reciprocal tariffs sparking broad market
volatility across asset classes. The US Dollar fell, equities fell, and bond
yields rose as markets attempted to grapple with the implications for the
global economy. The bond market's violent response prompted a 90 day pause
from the US administration and market relief. The US also cited strong
progress in negotiations with several countries as the month progressed
raising hopes that the impact of tariffs would be lower than feared. In the
US, the second half of the month saw a relatively strong earnings season,
which also helped sentiment.  The result was that stock markets fell quickly
then sharply rebounded.

 

It is too early to tell what the exact impact of the tariff proposals will be
(or even what the final tariff rates will be post negotiations). Economic data
in the month was contradictory in the US, with a large divergence between
"soft" survey data worsening and "hard" data remaining robust. Companies who
reported largely cited little change to consumer behaviour or pricing so far,
but this probably does not yet reflect the post tariff pricing or demand
impacts. In the UK, macro data remains mixed but corporate earnings remain
robust, particularly in domestically exposed sectors. Bucking the trend of
recent months, UK small and mid-caps fared better than large caps, with the
FTSE 250 Index up +2.7%, while the FTSE 100 Index fell, reflecting a
combination of investor positioning, currency moves, and of course that on
average UK smaller companies have lower direct exposure to US tariffs.

 

Alongside broad market volatility, there was plenty of stock and industry
moves driving performance of the portfolio during April. The clearest
identifiable theme was the strength of UK domestics, in particular
housebuilding (Bellway) and related supply chain (Grafton) as well as property
(Great Portland). Meanwhile M&A (mergers and acquisitions) activity was also a
feature, albeit this made both positive and negative contributions for the
portfolio, and reminds us of the difficulty shorting in the current
environment when the whole spectrum of “quality” seems up for grabs from
strategic buyers!

 

UK housebuilder Bellway was the top contributor. Bellway didn’t report in
the period, but we heard from a number of peers in the sector, which all gave
a familiar and reassuring message with regard current sales rates and build
costs. From several discussions we have had with Management teams across the
sector it is increasingly clear that Labour’s action on supply side reforms
is already making a demonstrable positive impact on planning permission. The
sector more broadly has benefitted from falling 2-year and 5-year swap rates
and whilst these metrics are unlikely to be closely monitored by the average
consumer (ditto the 10-year) there are signs of more competition in the
mortgage market, which the average consumer is much more attune with. UK
housebuilders remain a large thematic position in the portfolio and our
conviction grows as funding costs fall, sales rates remain resilient, and
planning approvals increase. Better still, despite an improving backdrop, this
is an industry trading towards historic trough multiples of book value despite
extremely depressed industry volumes. We expect a rapid improvement in ROCE
(return on capital employed) as volumes recover and a significant tightening
in price to book ratios as NAVs increase. Jet2 rallied following a £250
million share buyback announcement alongside a solid trading update, citing
encouraging demand for summer 2025. Growth has been partly driven by the
launch of two new UK operating bases at Bournemouth and Luton airports. The
flurry of M&A, which has been such a dominant feature in our universe over the
last couple of years, in most cases having been a headwind to performance, was
beneficial for our position in food delivery service business, Deliveroo,
which agreed to a £2.9 billion takeover from US listed peer, DoorDash.

 

April proved to be a difficult month for shorting, with two of the top three
detractors coming from short positions. The largest detractor was a short in a
facilities management business which reported a better than expected Q4
trading update with upgrades to full year guidance while announcing a new
share buyback program. The second biggest detractor was a short position in a
UK listed semiconductor business. The company has seen multiple downgrades,
and we continue to question its financial disclosure (too much emphasis on
bookings growth whilst most other metrics seem to be revised down, such as
revenues, profits and cashflows). However, the shares rose in the period on
the news of a potential takeover from US chipmaker, Qualcomm. We have retained
a short on the hope that no firm bid emerges and also the fact that the shares
have moved up on the news. The third largest detractor was identity
verification specialist, GB Group, which fell after the company warned that
near term growth could be impacted by ongoing global tariff uncertainty.

 

April was another volatile month and one in which we felt the portfolio
performed credibly given the environment. Furthermore, and a change from what
has felt like the ongoing narrative for all too long now, it was pleasing to
see small and mid-caps outperforming large caps. We don’t know the outcome
of tariff negotiations or what the end state for global trade will be.
However, the companies we have spoken to have all spoken of the increased
uncertainty slowing decision making, and therefore ultimately lower activity
levels. Some negative GDP impact globally and especially in the US and China
should therefore be expected. The range of outcomes for both the extent and
duration of those impacts remains very large, perhaps the most uncertain
economic environment since the start of the Covid pandemic. Inevitably, with
such uncertainty comes opportunity for companies to differentiate themselves
(positively or negatively) and the opportunity for fundamental analysis to
identify those winners and losers.

 

Despite all the tariff noise, we think the Company remains well diversified by
stock, theme, and industry. We still think the opportunity set is as rich and
compelling as we have ever seen and look forward to updating you in due
course.

 

As a result of the ongoing difficult outlook, we reduced the gross and net at
the beginning of the month to circa 111% and 105% respectively.

 

We thank shareholders for your patience and ongoing support.

 

1Source: BlackRock as at 30 April 2025

 

22 May 2025

 

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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