REG-BlackRock Throgmorton Trust Plc: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

29/07/2025 15:30

The information contained in this release was correct as at 30 June 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 June 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  1.9       12.1       1.2      20.1      31.1      
 Share price      3.3       13.3       2.4      17.7      17.8      
 Benchmark*       3.2       13.6       7.8      15.2      42.1      

  

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:                            653.92p     
 Net asset value incl. income:                            664.69p     
 Share price                                              597.00p     
 Discount to cum income NAV                               10.2%       
 Net yield 1 :                                            3.0%        
 Total Gross assets 2 :                                   £511.7m     
 Net market exposure as a % of net asset value 3 :        109.5%      
 Ordinary shares in issue 4 :                             76,981,864  
 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 26,228,000 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             35.1               
 Financials              24.2               
 Consumer Discretionary  8.2                
 Technology              6.0                
 Basic Materials         5.9                
 Consumer Staples        4.0                
 Real Estate             3.9                
 Health Care             2.4                
 Energy                  1.3                
 Communication Services  1.1                
                                            
 Net Current Assets      7.9                
                         -----              
 Total                   100.0              
                         =====              
                                            
 Country Weightings      % of Total Assets  
                                            
 United Kingdom          92.0               
 United States           6.8                
 Australia               0.7                
 Germany                 0.5                
                                            
                         -----              
 Total                   100.0              
                         =====              
                                            
                                            

 

 Market Exposure (Quarterly)                                 
                                                             
                 31.08.24   30.11.24   28.02.25   31.05.25   
                  %          %          %          %         
 Long            111.7      111.9      117.8      108.4      
 Short           2.7        3.4        4.9        2.8        
 Gross exposure  114.4      115.3      122.7      111.1      
 Net exposure    109.0      108.5      112.9      105.6      

 

 Ten Largest Investments                           
                                                   
 Company                  % of Total Gross Assets  
                                                   
 Tatton Asset Management  3.2                      
 XPS Pensions Group       3.0                      
 Rosebank Industries      3.0                      
 GPE                      3.0                      
 Grafton Group            2.9                      
 Morgan Sindall           2.8                      
 Boku                     2.8                      
 Bellway                  2.7                      
 IntegraFin               2.6                      
 Oxford Instruments       2.4                      
                                                   

 

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

 

 

The Company returned 1.9% in June, underperforming its benchmark, the Deutsche
Numis Smaller Companies +AIM (excluding Investment Companies) Index, which
returned 3.2%.1

 

June continued where May left off, with equity markets continuing their ascent
on the back of better economic data and strong company reporting, amidst a
calmer period on the trade war front. No month in recent memory seems to be
devoid of a large macro or geo-political event. In June we saw a sudden spike
in the oil price on the back of Israel bombing Iran, and then the subsequent
US bombing of uranium enrichment facilities.  A brief period of consternation
over Iran’s response gave way to relief as Iran telegraphed their
retaliation and the oil price duly fell as the focus switched back to an
oversupplied market. Throughout the month, as has indeed been the case for
most of the quarter, US economic data remained resilient, with scant evidence
of an impending local or global economic crash on the back of tariffs.
Admittedly it is hard to say with precision what is “underlying” versus
“pull forward”, not to mention the myriad idiosyncratic cycles that many
industrial and consumer industries and supply chains are contending with.

 

In the UK, we have observed some weakness in the labour market (to date mainly
within industries most exposed to the changes in employers’ National
Insurance), softer retail sales data and most pertinently downward revisions
to growth and productivity. The lack of growth in the UK, combined with
Labour’s U-turns over the winter fuel allowance and welfare reform leave the
UK in an increasingly precarious fiscal position. Ultimately taxes will have
to go up and my fear is that this will lead to months of speculation as to
what will be taxed. That backdrop is unlikely to be conducive to a healthy
consumer spending environment or a stimulant for businesses to invest. I
expect the outflows we’ve seen in the sector (46 of the last 48 months) to
continue.

 

Contributors to performance were well diversified by sector during the month.
The largest contributor was UK construction firm Morgan Sindall, which rose
sharply on another positive trading update with mid-teens upgrades to FY25
profits, which rolls forward into a higher base in FY26. Digital payments
business, Boku, reversed some of its recent weakness, as we were told a large
institutional seller had been cleared that had been weighing on the share
price. Tatton Asset Management saw its shares rally in response to impressive
full year results, which highlighted better than expected revenue and profit
growth, driven by net inflows which resulted in record level of AUM (assets
under management), up 24% on last year. Furthermore, management flagged the
strong start that they have made to the year, with £600 million of inflows in
the first 10 weeks, and reiterated their long-term growth target of £30
billion AUM by 2029.

 

The biggest detractor was entirely stock specific, with brick manufacturer
Ibstock shocking the market with a surprise profit warning on a combination of
increased costs from adding back capacity whilst at the same time seeing
pricing pressure across some product lines. Following meetings with management
we have reduced the position materially. The second biggest detractor was
Breedon which fell circa 15% on smallish (c.5%) profit downgrades from some
sell-side analysts in advance of the company reporting to reflect ongoing
adverse weather in the US as well as softer trading in UK as recovery in GB
volumes seems to be being pushed out to the right (again). The share price
fall seems an extreme overreaction to a modest reduction in forecasts, but
this is symptomatic of the UK mid-cap stock market right now. On any medium
term view the recovery in volumes for the likes of Breedon and Ibstock make
these shares very cheap on a “recovered earnings” basis. For Breedon
specifically, they have a dominant market position with strong pricing power
and have opened up a new growth market in the US but trade like an ex-growth
share on less than 10x p/e (price to earnings ratio), with a 4.5% DY (dividend
yield) and a double digit FCF (free cash flow) yield with plenty of growth
ahead. The third largest detractor was low-cost housebuilder, MJ Gleeson,
which issued a profit warning due to the slower pace of the housing market
recovery and gross margin pressure from rising build costs, incentives and
flat average selling prices. We have exited the position.

 

There are increasing concerns over the UK macroeconomic backdrop, and whilst
the sector is undoubtedly cheap with myriad undervalued opportunities where we
think the upside is significant on any medium-term view (be it “recovered
profits” or just higher earnings base), in the near term the risk of
earnings downgrades has increased as recovery is delayed.

 

The potential for the Bank of England (BoE) to cut interest rates offers a
glimmer of hope, but recent inflation data may give them pause for thought as
MPC members wrestle with the competing demands of inflation and a weakening
jobs market (although clearly some MPC members seem more sensitive to growth
and labour market weakness). A recession in the UK can be avoided, but that is
not really a reason to celebrate, as I think we are braced for a prolonged
period of anaemic growth. The U-shaped recovery continues to elongate and
demand for growth continues to be pushed out.

 

Consequently, we have reduced our domestic exposure as we have concerns that
the current backdrop is not conducive to encouraging consumers to spend, thus
elevated savings rates are likely to remain as such, with big ticket
consumption likely to be most at risk. Accordingly, we have exited or reduced
several positions across Travel & Leisure and Retail, as well as other
consumption related exposures (like housebuilders, RMI (repair, maintenance
and improvement) and related supply chains). Contemporaneously, we have
increased our shorts in this area too.

 

We are fortunate however to have the capacity to allocate up to 15% in non-UK
listed shares, and  I have added or have been adding to several names in
recent weeks and months across European Defence (Renk, Hensoldt), Aerospace
(Crane), differentiated US consumer companies (Boot Barn), technology (SPS
Commerce) as well as software companies we think will benefit from the
increased adoption of AI (Artificial Intelligence)we are witnessing across a
broader suite of tools (Gitlab). 

 

We approach the rest of year with increased caution and that is reflected with
a gross that at the time of writing is now around 117% and a net exposure that
is around 108%. An obvious question would be why not run with a lower gross
and net considering our concerns. The answer lies with the increased
allocation to non-UK shares, while our net in the UK including the short book
is in the low 90s.

 

We thank shareholders for your ongoing support.

 

1Source: BlackRock as at 30 June 2025

 

29 July 2025

 

ENDS

 

Latest information is available by typing www.blackrock.com/uk/thrg on the
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(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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