Portfolio Update

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 30 June 2019 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	0.9	7.8	-3.8	73.1	92.5
Share price	6.4	11.9	3.1	103.2	123.2
Benchmark*	-0.6	2.6	-7.2	28.6	32.6

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:	574.17p
Net asset value incl. income:	579.50p
Share price	566.00p
Discount to cum income NAV	2.3%
Net yield1:	1.8%
Total Gross assets2:	£423.8m
Net market exposure as a % of net asset value3:	99.7%
Ordinary shares in issue4:	73,130,326
2018 ongoing charges (excluding performance fees)5,6:	0.6%
2018 ongoing charges ratio (including performance fees)5,6,7:	1.3%

1. Calculated using the 2018 interim dividend declared on 26 July 2018 and paid on 29 August 2018, together with the 2018 final dividend declared on 12 February 2019 and paid on 28 March 2019.
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 7,400,000 shares held in treasury.
5. Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 November 2018.
6. With effect from 1 August 2017 the base management fee was reduced from 0.70% to 0.35% of gross assets per annum.
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
Consumer Services	27.4
Industrials	22.9
Financials	21.8
Consumer Goods	8.4
Health Care	6.9
Technology	6.1
Basic Materials	2.2
Telecommunications	1.5
Net current assets	2.8
	-----
Total	100.0
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Market Exposure (Quarterly)
	31.08.18	30.11.18	28.02.19	31.05.19
Long	119.4	103.7	108.7	113.7
Short	9.6	10.5	14.9	13.2
Gross exposure	129.0	114.2	123.6	126.9
Net exposure	109.8	93.2	93.8	100.5

Ten Largest Investments
Company	% of Total Gross Assets
4imprint Group	3.1
YouGov	3.0
Dechra Pharmaceuticals	3.0
SSP	2.9
JD Sports Fashion	2.9
IntegraFin	2.7
Aveva	2.6
Bodycote	2.6
Serco	2.5
Watches of Switzerland	2.4

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

During June the Company’s NAV per share rose by 0.9%¹ to 579.50 on a cum income basis, outperforming our benchmark index, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, which fell by -0.6%¹. The long book generated 0.1%¹ and the short book generated 0.8%¹ of gross performance.

June was an eventful month for the stockmarket and the Company, with increased volatility, market swings from risk-on to risk-off and mini style reversals. Against this backdrop our benchmark finished down for the month, however thanks to some key stock specific wins, particularly in the short book, the Company was able to deliver another positive month in both absolute and relative terms.

This biggest stock contributor was from a short position in a UK contracting firm that collapsed on a huge profit warning. This company is now down circa +70% YTD having already fallen +70% in 2018, which vindicates our decision to add to this position in recent months. It is all too tempting to close shorts after material share price falls, particularly when they may appear “cheap” and with so many people who want to tell you they are “cheap”, but there are times when real conviction in one’s analysis is required, and the resolve to add to the short.

Aveva continued to rise following strong results released at the end of May, while the shares received a further boost during the month following its promotion into the FTSE 100 Index. Shares in Sumo Group rose after the company delivered a positive trading update at its AGM, reiterating confidence for the remainder of 2019 with upgrades to guidance.

The largest detractor during the month was our position in Craneware which issued a profit warning on the last day of the month. This is a UK listed software company focused on the US healthcare market which has a very high percentage of recurring revenues, so the miss versus expectations was related to a shortfall in new contract wins which the management attribute to poor sales execution rather than any change in the competitive landscape. We have discussed the issues at length with management; if their explanations are correct then the issues are transient, remedial actions are in place, and this should have little impact on the long term earnings power of the company.

June was a month where stock specifics drove performance of the Company on both the long and the short side. Against the backdrop of a falling market our ability to generate stock specific alpha from long positions that can see strong share price moves regardless of the direction of the market is precisely the reason why we always highlight the importance of focusing on company fundamentals. This is just as true on the short side. While a falling market will clearly be helpful to many short positions, it is far more rewarding, both financially and intellectually, when a short thesis plays out as predicated. The above is a short summary, but we were encouraged by the number of stock specific wins that we had during the month, and recent updates from a number of our holdings continue to support our invest thesis, and we therefore remain confident in our positioning and our ability to continue to deliver regardless of what happens next with the market or the macro environment. Our net exposure remains around 100% which as mentioned previously is lower than historical average levels.

¹Source: BlackRock as at 30 June 2019

22 July 2019

ENDS

Latest information is available by typing www.blackrock.co.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.