Portfolio Update

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 31 January 2020 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	1.2	14.2	32.9	62.1	118.8
Share price	0.6	18.1	44.0	104.2	169.5
Benchmark*	-2.1	9.5	13.5	18.3	45.7

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:	670.61p
Net asset value incl. income:	678.05p
Share price	692.00p
Premium to cum income NAV	2.1%
Net yield1:	1.5%
Total Gross assets2:	£533.2m
Net market exposure as a % of net asset value3:	105.4%
Ordinary shares in issue4:	78,633,941
2019 ongoing charges (excluding performance fees)5,6:	0.6%
2019 ongoing charges ratio (including performance fees)5,6,7:	1.8%

1. Calculated using the 2019 interim dividend declared on 23 July 2019 and paid on 28 August 2019, 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 1,896,385 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).  On the first day of the financial year outperformance from the previous financial year (if any) is carried forward and accrued in the daily NAV released to the London Stock Exchange.

Sector Weightings	% of Total Assets
Industrials	26.9
Consumer Services	26.6
Financials	19.7
Consumer Goods	10.5
Technology	6.9
Health Care	6.4
Telecommunications	2.1
Basic Materials	1.5
Net current liabilities	-0.6
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Total	100.0
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Market Exposure (Quarterly)
	28.02.19 %	31.05.19 %	31.08.19 %	30.11.19 %
Long	108.7	113.7	109.1	103.2
Short	14.9	13.2	11.2	7.4
Gross exposure	123.6	126.9	120.3	110.6
Net exposure	93.8	100.5	97.9	95.8

Ten Largest Investments
Company	% of Total Gross Assets
IntegraFin	3.3
Watches of Switzerland	2.9
YouGov	2.8
4imprint Group	2.7
WH Smith	2.7
Serco Group	2.6
Games Workshop	2.4
Dechra Pharmaceuticals	2.1
Gamma Communications	2.1
IWG	2.1

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

The Company delivered a net return of 1.2%¹ during January, with both the long and short book contributing positive returns. For comparison, our benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, fell by 2.1%¹, therefore the relative outperformance of over 3% reflects positive stock specific successes for several of our positions, both long and short.

January saw a reversal in many areas of the market (domestic retailers, banks, resources) often described as “value” that rallied strongly in December. Several retailers delivered profit warnings (due in part to an inability to manage the prolonged discounting period created by Black Friday and the resulting pull forward of consumer spend) and reduced forward guidance, and resources fell on concerns of the health of the global economy. This environment favours our investment style as we are underweight to these areas and deliberately focus on companies with strong growth prospects. However, it is important to note that the returns generated in the month are more to do with stock specific outcomes than a style bias.

The biggest single stock contributor was Integrafin, which rose after updating the market that net flows in the most recent period had been stronger than anticipated, supporting our multi-year thesis that this best-in-class advisor platform remains well placed to win market share in a growing market. Asset manager, Liontrust, performed well during the month in response to a positive trading update showing strong inflows since the start of the financial year. The acquisition of Neptune provided further diversification to the business and added £2.7bn in AUM (Assets Under Management), while the sustainable investment products have been in demand as investors’ appetite for them continues to build. The third largest contributor to performance was Games Workshop, the creator of the Warhammer miniatures game, which soared to record highs in response to very strong half-year results, accompanied by a large increase in its dividend and upgrades to forward guidance.

The largest detractor to performance during the month was a short position in a robotics process automation company that rose sharply on the back of a trading update that revealed revenues had accelerated. The same trading statement also revealed profits and cash were worse, but the market focused much more on the improving revenue line and the company’s belief that its cash position will improve. Despite an upbeat trading update, shares in WH Smith fell in the month, which we would attribute to general weakness in the travel and leisure sector on increased concerns regarding the Coronavirus. The same applies for the global industrial sector, which we believe explains the weakness in Bodycote.

Whilst recent events surrounding the Coronavirus merit some caution, at this stage we have not made any changes to the portfolio as a result. Recent trading statements have generally benefitted the Company’s holdings, where many of the long-term structural growth themes we have identified are showing increased momentum. The UK market remains a significant underweight for many international investors, so any change here post recent political developments could fuel demand for UK PLC and this combined with a release in corporate spending (spent wisely) could bode well not only for earnings growth but share prices too.  We think it is likely that the Government will look to use fiscal spending to fuel the economy, so we have deliberately sought exposure to companies we think are well placed to benefit, in addition to increasing our exposure to housebuilders. As a consequence of these considerations, we have increased our gross exposure to over 120% and our net exposure to circa 105%, and we continue to approach the year with optimism.

¹Source: BlackRock as at 31 January 2020

24 February 2020

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.