Portfolio Update

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 May 2018 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	4.5	9.0	16.6	64.9	124.5
Share price	1.9	11.6	25.8	73.2	141.6
Benchmark*	1.2	5.4	4.7	27.6	66.2

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 five year period indices have been blended to reflect this.

At month end
Net asset value capital only:	591.06p
Net asset value incl. income:	598.19p
Share price	538.00p
Discount to cum income NAV	10.1%
Net yield1:	1.7%
Total Gross assets2:	£437.5m
Net market exposure as a % of net asset value3:	105.9%
Ordinary shares in issue4:	73,130,326
2017 ongoing charges* (excluding performance fees)5,6:	0.9%
2017 ongoing charges* ratio (including performance fees)5,6,7:	2.2%

*Ongoing Charges: The management fee rate reductions, as detailed in the notes below, will impact management fees in 2017 and onwards.   The impact of the new fee arrangements, assuming the same level of performance from the manager and assuming all other charges remain the same, would be to reduce the level of Ongoing Charges borne by the Company.

1. Calculated using the 2017 interim dividend declared on 24 July 2017 and the 2017 final dividend declared on 12 February 2018 and paid on 29 March 2018.
2. Includes current year revenue and excludes gross exposure through contracts for difference.
3. Long positions less short positions 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 2017.
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 arrangements for the Company have changed.  The annual performance fee is now 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 fees (comprising the base management fee of 0.35% and a potential  performance fee of 0.90%) will therefore fall to 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	34.7
Financials	20.5
Consumer Services	16.0
Technology	8.6
Consumer Goods	7.5
Health Care	6.1
Basic Materials	3.7
Oil & Gas	2.0
Net current assets	0.9
	-----
Total	100.0
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Market Exposure (Quarterly)
	31.08.17	30.11.17	28.02.18	31.05.18
Long	115.3	116.9	119.6	115.9
Short	5.8	6.3	8.4	10.0
Gross exposure	121.1	123.2	128.0	125.9
Net exposure	109.5	110.6	111.2	105.9

Ten Largest Investments
Company	% of Total Gross Assets
Ascential	2.8
Dechra Pharmaceuticals	2.7
Integrafin	2.2
Robert Walters	2.2
Fevertree Drinks	2.2
Restore	2.1
YouGov	2.1
SSP	2.0
Bodycote	2.0
4imprint Group	2.0

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

During May the Company’s NAV per share rose by 4.5%* to 598.19p on a cum income basis whilst our benchmark index rose by 1.2%*; the FTSE 100 Index rose 2.2%* (all performance figures are in sterling terms with income reinvested).

May proved a strong month for the Company, in fact the strongest month of relative outperformance in the last 7 years*. Performance during the month was driven by the long book, and the short book was flat, which we feel is a strong outcome against the benchmark rise of 1.2%*, reflecting several successes amongst our short positions. Some of this can be attributed to the general shape of the market, with a reversal in areas that had been strong in April notably resources and UK domestics, both areas we are structurally underweight.

The reversal in UK domestics was driven by some significant profit warnings within UK retail, which not only assisted the short book, but also adding support, we think, to why we are structurally bearish on many consumer facing UK domestic industries and why we don’t think many of these “value” areas offer good value. However, despite the stock specific success in our UK consumer facing short, this didn’t make it into our top 10 contributors for the month due to the strength of other positions which were all long positions (with the exception of another short position in the Oil & Gas sector which cut its production guidance again).

The biggest contributor was from Integrafin, a UK savings platform for financial advisors, which delivered strong results despite the recent market volatility. This was a share we purchased at IPO (Initial Public Offering) and subsequently increased our holding in recent weeks, so it was reassuring to see this conviction rewarded.  Other strong contributors included YouGov, which rose on buying out its remaining 80% stake in SMG, and Accesso, which rose on a strong trading statement.

The biggest detractors were from Restore Group, Robert Walters, and Superdry.  Restore Group weakened on an in-line trading statement but revealed weakness in its shredding division. Robert Walters weakened on no stock specific news-flow and probably just reflect a period of consolidation after a very strong recent run its share price.  One share we did get wrong is Superdry, the month’s biggest detractor. As mentioned earlier, we own very few UK domestics, especially in bricks and mortar retail, so this was a genuine exception.  The company issued a disappointing trading update showing that in-store sales had suffered from the bad weather earlier in the year while a shift in sales mix to lower margin wholesale and clearance activity was impacting gross margins. The position is currently under review and we’ve not added on this weakness.

Overall, we believe the portfolio is in good shape, our long positions are trading well and the shorts have had a decent month on specific news-flow which has helped reverse some of the squeezes that weighed on performance in April and vindicated our investment thesis. We haven’t made any real changes to overall positioning.

*Source: BlackRock

13 June 2018

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.