Portfolio Update

The information contained in this release was correct as at 31 May 2021.  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 31 May 2021 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	1.0	16.4	62.4	54.9	143.9
Share price	0.6	16.5	63.1	73.9	193.1
Benchmark*	1.2	11.8	55.6	27.2	64.9

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:	878.40p
Net asset value incl. income:	883.41p
Share price	891.00p
Premium to cum income NAV	0.9%
Net yield1:	1.1%
Total Gross assets2:	£826.3m
Net market exposure as a % of net asset value3:	119.2%
Ordinary shares in issue4:	93,539,037
2020 ongoing charges (excluding performance fees)5,6:	0.60%
2020 ongoing charges ratio (including performance fees)5,6,7:	1.60%

1. Calculated using the 2020 interim dividend declared on 23 July 2020 and paid on 26 August 2020, together with the 2020 final dividend declared on 10 February 2021 and paid on 31 March 2021.

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 0 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 2020.

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
Industrials	30.3
Consumer Discretionary	23.0
Financials	17.1
Consumer Staples	9.4
Technology	7.5
Health Care	4.6
Telecommunications	3.6
Basic Materials	2.5
Net current assets	2.0
	-----
Total	100.0
	=====
Country Weightings	% of Total Assets
United Kingdom	90.7
United States	6.4
France	1.1
Australia	0.7
Denmark	0.6
Netherlands	0.4
Israel	0.1
	-----
Total	100.0
	=====

Market Exposure (Quarterly)
	31.08.20 %	30.11.20 %	28.02.21 %	31.05.21 %
Long	121.0	120.4	126.8	121.3
Short	2.4	1.9	1.5	1.5
Gross exposure	123.4	122.3	128.3	122.8
Net exposure	118.6	118.6	125.3	119.8

Ten Largest Investments
Company	% of Total Gross Assets
Gamma Communications	3.2
Impax Asset Management	2.8
Electrocomponents	2.7
YouGov	2.6
Watches of Switzerland	2.6
Moonpig Group	2.4
Oxford Instruments	2.2
Pets At Home	2.1
Breedon	2.0
Games Workshop	2.0

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

The Company returned 1.0%¹ in May, marginally trailing its benchmark, the Numis Smaller Companies +AIM ex Investment Trusts, which returned 1.2%¹. Performance during the month was driven by the long book, while the short book was flat.

There remains an ongoing debate about ‘value vs growth’ and while April favoured growth, May reversed some of this trend. As mentioned in the past, and perhaps surprisingly, we really do not see the ‘value vs growth’ discussion as a critical issue in investment returns. But rather we see the high level of ongoing industrial change as creating many more opportunities for alpha, and far more important in delivering good returns to our investors. It is, however, true that May favoured value over growth, and that statement would also be true on average for the past 7 months since November 2020 when a vaccine was first announced. It’s worth highlighting however, that despite this backdrop, the Company has delivered a positive result in the first half of our financial year, returning 31.0%¹ and outperforming the benchmark by +3.3%¹. This, we believe is very credible and an indicator of just how much opportunity we are seeing even in an environment that is deemed unfavourable for differentiated growth companies. We remain very positive on the investments we have made and expect great things over the coming periods as they deliver on their promise. We also believe ongoing industry pressures and business model frailties will be exposed for the struggling companies in our short book as normality returns.

To that end we have experienced another month with strong updates from our long positions where the share prices of some have appreciated materially, whilst other shares without updates have drifted. This effect actually gives us some confidence. We are seeing shares drift only to report strong earnings, which focuses attention on improved profits, and the shares rise. We see the drifting as the transitory phase and the value demonstrated by the results as the real alpha gained over time. The recovery trade continued during May, but in the most recent days we have seen some of the beneficiaries fall on weak updates and equity raising as the COVID-19 crisis lingers and ongoing industry challenges persist. On that basis there may be emerging signs of the end to the recovery trade, but as mentioned above this is not actually key to our investment theses or the returns that can be delivered by the portfolio.

The largest contributor was Gamma Communications, where the shares rose to new highs on the back of another upgrade to forecasts accompanying their strong trading update. At its core this reflects the strength of demand and operating momentum in the business as customers upgrade their corporate communications and embrace the cloud. Shares in Games Workshop rose after the company forecast that profits for the year ending May 2021 would at least £150m, representing almost a 70% increase compared to the previous year. Auction Technology Group, a market leader in digital auction marketplaces, delivered very strong results in May and has now doubled since we purchased at IPO (Initial Public Offering) earlier this year.

The largest detractor during the month was speciality pharmaceuticals business, Ergomed, which gave back some of last month’s gains following its announced expansion into Japan. Our holding in Electrocomponents delivered strong results in the period but fell back in absence of a material upgrade. The company is growing organic revenues at double digits as they win market share and we think its growth has the potential to accelerate further as they solidify their market position through M&A (Mergers & Acquisitions). Chegg, one of our US positions, reported a strong update in our opinion but fell back after some great share price performance in the last year. Of course, in our mind, the company is so much more than a “Covid trade”, having delivered growth that has exceeded analyst forecasts for several years pre-dating the pandemic given the strength of its offering and the huge changes happening in the education market. Chegg clearly saw an acceleration during the pandemic, but we believe it has the potential for many more years of growth when COVID-19 is firmly in the rear view mirror.

Overall, we see May as period of consolidation after a very strong April and another stepping stone. The bigger picture is unchanged as is our optimism and conviction. The reporting season continues to validate our long book holdings which gives confidence that they are doing the right things and over time we expect higher revenues, profits and share prices. Whilst we’ve outlined three key contributors, there are many other shares that we could discuss that have driven performance this month on the back of positive updates such as 4Imprint, or Impax Asset Management. Our outlook for 2021 remains very positive and we expect to see continued rapid industry change that will deliver huge opportunities in emerging companies. We are therefore making sure we work hard to capture new opportunities and to monetise our existing ideas. We continue to operate a net position of around 120%, which is the highest that it has been under my management, reflecting the vast opportunity we see for differentiated growth companies. We thank shareholders for their ongoing support.

¹Source: BlackRock as at 31 May 2021

18 June 2021

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.