Portfolio Update

The information contained in this release was correct as at 31 January 2022.  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 January 2022 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	-13.5	-13.3	12.5	67.1	103.8
Share price	-14.5	-13.7	11.7	78.3	152.9
Benchmark*	-6.4	-5.7	11.6	36.6	42.4

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:	818.94p
Net asset value incl. income:	828.96p
Share price	834.00p
Premium to cum income NAV	0.6%
Net yield1:	1.2%
Total Gross assets2:	£855.4m
Net market exposure as a % of net asset value3:	119.3%
Ordinary shares in issue4:	103,184,864
2021 ongoing charges (excluding performance fees)5,6:	0.57%
2021 ongoing charges ratio (including performance fees)5,6,7:	1.38%

1. Calculated using the 2021 interim dividend declared on 26 July 2021 and paid on 27 August 2021, together with the 2020 final dividend declared on 10 February 2021 and paid on 1 April 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 2021.
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	29.6
Consumer Discretionary	22.4
Financials	18.1
Technology	8.3
Consumer Staples	6.7
Health Care	5.9
Basic Materials	2.6
Telecommunications	2.4
Net current assets	4.0
	-----
Total	100.0
	=====
Country Weightings	% of Total Assets
United Kingdom	92.3
United States	5.2
France	1.1
Sweden	1.1
Australia	0.6
Germany	-0.3
	-----
Total	100.0
	=====

Market Exposure (Quarterly)
	28.02.21 %	31.05.21 %	31.08.21 %	30.11.21 %
Long	126.8	121.3	119.4	121.3
Short	1.5	1.5	2.4	2.7
Gross exposure	128.3	122.8	121.8	123.9
Net exposure	125.3	119.8	117.0	118.6

Ten Largest Investments
Company	% of Total Gross Assets
Electrocomponents	3.5
Gamma Communications	3.3
Watches of Switzerland	2.9
IntegraFin	2.9
Oxford Instruments	2.9
Impax Asset Management	2.6
Auction Technology	2.5
YouGov	2.3
Baltic Classifieds Group	2.3
Dechra Pharmaceuticals	2.3

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

The Company returned -13.5%¹ in January, underperforming its benchmark, the Numis Smaller Companies +AIM (ex Investment Companies) Index, which returned -6.4%¹. To report a negative return like this is of course disappointing, but January was month of extreme factor moves where “growth” shares significantly underperformed “value”, and a “sell what’s done well” mentality prevailed causing many of our long positions to fall sharply (circa 20-30%) during the period of no news-flow.

We think this is an important point as it reinforces our belief that the sell-off is mainly a market reaction across multiple shares rather than a fundamental reflection of particular industry or sector economics. And among other things this gives us faith that the share price effects will not be enduring. It’s also fair to say that the company reporting we have had so far in 2022 has remained strong and this also lends support to a subsequent rebound in share prices. We don’t mean to dismiss the large moves in January, just to indicate that from our observations this remains more in the camp of ‘high market volatility’ than ‘fundamental lost value’.

The largest detractors during the month were Auction Technology Group, Baltic Classifieds and Impax Asset Management. For the avoidance of doubt, none of these falls can be linked to any negative stock specific news-flow, and the common theme across the three is that they all performed well last year. These are just the top three detractors, but there are others in the portfolio that faced a similar fate in January, therefore we have been using this as an opportunity to add to many of these high conviction positions at what we believe are extremely attractive valuations.

The largest positive contributor was WH Smith which provided a solid trading update highlighting continued recovery in its end markets and remains well placed to capitalise on the ongoing recovery in travel through the key summer period. Shares in SigmaRoc rose after the company delivered a positive trading update (with upgrades) late December and then subsequently announced a small acquisition. Jet2 rose in response to the decision by France to relax travel restrictions on arrivals from the UK.

Inflation is clearly a hot topic right now and we think about it in three ways. First is the potential impact on interest rates and its relationship with the discount rate and how this might impact the valuations of growth shares. It is important to distinguish here between cash generative and structurally advantaged long-term compounders versus speculative jam-tomorrow cash consumptive loss making businesses. The last few weeks have shown little difference between these types of shares, but the latter are very much the types of shares we avoid and or short.  Second is the potential impact for inflation to erode corporate profits by negatively impacting margins, but this is a real risk for commoditised or labour-intensive industries with limited pricing power and anaemic growth prospects and far less of a challenge for high margin structural growers that command pricing power. Third is the risk that sustained inflation filters erodes household cashflows and demand for goods and services weakens – a growing risk but where the impact will not be felt evenly and as such some protected areas will fare much better.

At times like this we often find ourselves confronting a narrative where good long term differentiated investments are simply dismissed as “expensive”, or simply aggregated into a basket like “growth”. Our observation is that when these situations occur, behaviour quickly evolves into just selling anything that has performed well regardless of valuation, earnings power and outlook. We are firm believers in our holdings, and whilst we acknowledge that in any given year, we will make mistakes and not all our investments will deliver as planned, we think the majority will and they will in turn be rewarded. The valuations of many of our investments have retraced in the last few weeks to attractive levels we haven’t seen, whilst their market position and outlook has improved. We will always continue our work to test if anything has changed at any company and will be disciplined in reacting where we conclude it has. But in terms of overall positioning, we remain positive on the opportunity set and retain a net of around 119%. We thank shareholders for your ongoing support during these challenging environments.

¹Source: BlackRock as at 31 January 2022

17 February 2022

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.