Portfolio Update

BLACKROCK THROGMORTON TRUST PLC All information is at30 November 2016 and unaudited.
Performance at month end is calculated on a cum income basis
		One Month		Three months		One year		Three years			Five years
Net asset value		3.0		3.9		7.3		30.8			118.9
Share price		2.2		-0.9		-2.1		17.9			107.7
Benchmark*		0.9		1.7		6.3		18.2			81.2
Sources: BlackRock and Datastream *With effect from 1 December 2013 the Numis Smaller Companies excluding AIM (excluding investment companies) Index replaced the Numis Smaller Companies plus AIM (excluding investment companies) Index as the Company’s benchmark. The three and five year period indices have been blended to reflect this.
At month end
Net asset value capital only:									405.81p
Net asset value incl. income:									412.34p
Share price									325.00p
Discount to cum income NAV									21.2%
Net yield1									2.1%
Total Gross assets2									£302.4m
Net market exposure as a % of net asset value5									108.4%
Ordinary shares in issue3:									73,130,326
2015 ongoing charges (excluding performance fees)4:									1.1%
2015 ongoing charges ratio (including performance fees):									2.3%
1. Calculated using current year interim dividend paid on 19 August 2016 and prior year final dividend. 2. Includes current year revenue and excludes the gross exposure through contracts for difference. 3. Excluding 7,400,000 shares held in treasury. 4. Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 November 2015. 5. Long positions less short positions as a percentage of net asset value.
Sector Weightings					% of Total Assets
Industrials					31.4
Consumer Services					21.6
Financials					14.1
Consumer Goods					9.3
Basic Materials					8.6
Health Care					6.5
Technology					5.9
Oil & Gas					2.2
Net current assets					0.4
					-----
Total					100.0
					=====
Market Exposure (Quarterly)
	29.02.16		31.05.16 %				31.08.16 %			30.11.16
Long	118.2		114.4				114.3			116.9
Short	11.2		8.3				8.3			8.5
Gross exposure	129.4		122.7				122.6			125.4
Net exposure	107.0		106.1				106.0			108.4
Ten Largest Investments
Company					% of Total Gross Assets
CVS Group					3.5
4imprint Group					3.2
JD Sports Fashion					2.7
Dechra Pharmaceuticals					2.5
Hill & Smith					2.2
Avon Rubber					2.0
Accesso Technology					1.8
Cineworld Group					1.8
Workspace Group					1.7
Restore					1.6

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

November was a better month for the Company with the NAV on a cum income basis increasing by 3.0% to 412.34p per share. The benchmark increased by 0.9%, and the FTSE 100 Index fell by 2.0%, both also on a cum income basis. Outperformance was largely driven by good stock selection in the long only portfolio and a good performance from the CFD portfolio. The long only portfolio added 2.5% to absolute performance during the month with the CFD portfolio adding 0.7%, both before costs.

The biggest positive contributors to stock selection in the long only portfolio were our holdings in CVS Group, Lavendon and Hill & Smith. CVS Group continues to trade strongly, with most recent disclosed like for like sales growth of 6.3%. It has continued to carry out acquisitions of veterinary practices and ancillary activities, recently expanding into the Netherlands. Lavendon received a takeover approach from a private Belgian company and the shares bounced sharply. We decided to sell our stock, although subsequently another approach was made. Hill & Smith is benefitting from increased infrastructure spending, especially road widening. It has a good presence in the UK and the US, both countries where infrastructure spending is likely to increase.

There were no material detractors from a stock selection point of view during the month.

Sector allocation was positive with our overweight position in aerospace and defence companies proving beneficial. Our underweight sector position in mining stocks continued to detract from relative performance.

We added a small holding in Warpaint which listed during the month. Warpaint is a colour cosmetics business with an own-brand W7 supplying high-quality cosmetics at affordable prices.

Turning to the CFD portfolio, both sides of the book made a positive contribution, with the long book adding 0.58% and the short book adding 0.13% before costs. Returns were dominated by stock and industry specifics, with 8 of the top 10 contributors coming directly as a result of company specific updates this month.

Looking at the top 10 contributors, 7 were Longs and 3 were shorts.  This was also a month where the long CFD’s largest holdings delivered, with 4 of the portfolio’s largest holdings rising over 10% in the month (CVS Group, RPC Group, JD Sports, and Melrose). Turning to the short book, 3 of the top 10 contributors were short positions that benefitted from significant profit warnings (2 were Industrials and 1 was in Consumer Goods). We have decided to close one of the Industrial short positions, its shares now down over 50% this year, but we think there are several other shorts in the portfolio that are exposed to the same industry pressures (weaker demand) and have operating models and weak balance sheets that require an acceleration of growth, something we are sceptical of. Our confidence in the short book is high, and it was therefore encouraging to see some of out long held views playing out in November.

Turning to the CFD portfolio’s detractors, the losses were small, and came from a range of longs (generally profit taking) and shorts (squeezing up on in-line statements).

Recent CFD portfolio activity has been focused on the short book, targeting opportunities where we believe there could be revenue shortfalls and cost pressures – notably in the areas of technology where we believe IT budgets are very sensitive to fragile business confidence, and in consumer services where the demand outlook is less certain and where several companies are facing a triple whammy of wage pressures, rising sourcing costs and increased business rates.

13 December 2016

ENDS

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