REG-BlackRock Throgmorton Trust Plc: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

24/06/2024 08:00

The information contained in this release was correct as at 31 May 2024. 
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 2024 and unaudited. 
Performance at month end is calculated on a cum income basis

 

                  One       Three      One      Three     Five      
                   Month     months     year     years     years    
                   %         %          %        %         %        
 Net asset value  7.6       11.3       16.4     -16.0     33.0      
 Share price      8.5       10.7       11.6     -24.2     30.7      
 Benchmark*       6.4       11.8       12.5     -11.7     20.8      

  

Sources: BlackRock and Deutsche Numis

*With effect from 15 January 2024 the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index changed to the Deutsche Numis Smaller
Companies plus AIM (excluding Investment Companies).

 

 At month end                                                         
 Net asset value capital only:                            693.81p     
 Net asset value incl. income:                            703.55p     
 Share price                                              639.00p     
 Discount to cum income NAV                               9.2%        
 Net yield 1 :                                            2.3%        
 Total Gross assets 2 :                                   £644.5m     
 Net market exposure as a % of net asset value 3 :        112.6%      
 Ordinary shares in issue 4 :                             91,606,927  
 2023 ongoing charges (excluding performance fees) 5,6 :  0.54%       
 2023 ongoing charges ratio (including performance        0.87%       
  fees) 5,6,7 :                                                       

1. Calculated using the Interim Dividend declared on 07 July 2023 paid on 29
August 2023, together with the Final Dividend declared on 05 February 2024
paid on 28 March 2024

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 11,602,937 shares held in treasury.

5. The Company’s ongoing charges are calculated as a percentage of average
daily net assets and using the management fee and all other operating
expenses, excluding performance fees, finance costs, direct transaction
charges, VAT recovered, taxation and certain other non-recurring items for the
year ended 30 November 2023.

6. With effect from 1 August 2017 the base management fee was reduced from
0.70% to 0.35% of gross assets per annum. The Company’s ongoing charges are
calculated as a percentage of average daily net assets and using the
management fee and all other operating expenses, including performance fees,
but excluding finance costs, direct transaction charges, VAT recovered,
taxation and certain other non-recurring items for the year ended 30 November
2023.

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             35.5               
 Consumer Discretionary  18.6               
 Financials              16.9               
 Basic Materials         6.8                
 Technology              6.3                
 Telecommunications      3.7                
 Health Care             1.9                
 Consumer Staples        1.9                
 Real Estate             1.6                
 Energy                  1.1                
 Communication Services  0.7                
 Other                   0.1                
 Net Current Assets      4.9                
                         -----              
 Total                   100.0              
                         =====              
                                            
 Country Weightings      % of Total Assets  
                                            
 United Kingdom          91.1               
 United States           4.3                
 Ireland                 1.8                
 Australia               0.8                
 France                  0.8                
 Canada                  0.6                
 Switzerland             0.5                
 Netherlands             0.4                
 Sweden                  -0.3               
                         -----              
 Total                   100.0              
                         =====              

 

 Market Exposure (Quarterly)                                 
                                                             
                 31.08.23   30.11.23   29.02.24   31.05.24   
                  %          %          %          %         
 Long            112.7      111.3      117.9      114.9      
 Short           4.5        3.8        3.2        2.3        
 Gross exposure  117.2      115.1      121.1      117.2      
 Net exposure    108.2      107.5      114.7      112.6      

 

 Ten Largest Investments                           
                                                   
 Company                  % of Total Gross Assets  
                                                   
 Oxford Instruments       3.1                      
 Breedon                  3.0                      
 Gamma Communications     2.9                      
 Grafton Group            2.7                      
 IntegraFin               2.6                      
 Hill & Smith Holdings    2.5                      
 Rotork                   2.5                      
 WH Smith                 2.4                      
 Tatton Asset Management  2.3                      
 4imprint Group           2.3                      
                                                   
                                                   

 

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

 

The Company returned 7.6% in May, outperforming its benchmark the Deutsche
Numis Smaller Companies + AIM (excluding Investment Companies) Index, which
returned 6.4%.1

 

Despite a bout of volatility in the last few days of May, it was a strong
month for risk assets broadly, with most developed markets delivering a
positive return. As for the macro, May did see some softer global growth data
points while US and UK inflation prints revealed ongoing falls albeit perhaps
not at the rate hoped for, with Services still a laggard. On the UK
specifically, the economic backdrop is steadily improving; growth is up,
inflation is falling, and consumer confidence is rising alongside real wage
growth (ASDA Income tracker is now at 3-year high). We think the news of a
snap election in the UK is a positive overall as it removes a prolonged period
of uncertainty and could indeed herald a period of political stability (just
reflect on how many cabinet posts have changed in recent years) with drives
investment. Combine this with an improving backdrop and potential for rate
cuts we think the UK recovery is only in the foothills and the valuation
anomaly extreme. M&A activity in the UK remains high, highlighting the value
on offer. Interestingly, the UK small and mid-caps saw the first monthly net
inflow after 35 consecutive months of outflows! Maybe an anomaly, maybe the
start of a trend? As ever, there was lots going on at the company level, and
this was a month of lots of stock specific developments, both positive and
negative, though thankfully we got more of the former than the latter.

 

The largest contributor during the month was from Zotefoams, which rallied
sharply in response to a positive trading statement. The company reported
positive growth across a number of its High-Performance Products (HPP)
including footwear, aviation and insultation products, while also updating
investors on its ReZorce mono-material barrier packaging product, which is
currently entering late-stage quality and technical validation in preparation
for market trials with a European retailer. IntegraFin, the operator of the
Transact investment platform, reported a 13% year-on-year increase in funds
under direction, which rose to £61bn as at the end of March 2024. Net inflows
onto the platform rose by 4% during the year, with advisors using the platform
also growing at the same rate to 7,900. Bathroom retailer Victorian Plumbing
shares rose on the announced acquisition of an online competitor which should
be significantly accretive to earnings. 

 

Elevated levels of M&A activity remained an ongoing feature in the UK small
and mid-cap market, but remains a double edged sword. Do we own the companies
that are bid for, thereby generating a fillip to short-term performance, and
if so, is the price commensurate with the long-term value we think they are
capable of generating? As for May, we saw a large cash bid (+70% premium) for
a company we don’t own – Keywords Studios – itself a large constituent
of the benchmark so that was the biggest drag on relative performance in the
month (costing around 38bps). Consumer electronics business, TT Electronics,
fell after reporting ongoing destocking in its shorter-cycle components
products in North America. Management felt confident enough to reiterate their
full year guidance but it will be more H2 weighted than previously thought.
However, overall, the book-to-bill ratio has moved above 1x for the first time
in over 12 months, with Q124 orders sequentially higher than Q423 and comps
ease through the year. The shares trade on just over 7x current year earnings,
so one might think quite a lot of negativity is already priced in. Shares in
travel operator Jet2 drifted lower during the month despite no stock specific
news flow.

 

Overall, a lot to contend with in May. Indeed, there are many stocks worth
talking to clients about this month, both good and bad. As discussed earlier,
we think the outlook for the UK is improving, share buy backs and M&A activity
continue to provide a valuation underpin, so H2 2024 could be exciting with an
election out the way, improving macro and sentiment and maybe even an
improving flow backdrop. We remain reassured with the breadth of returns in
the portfolio, with positive contributions across a broad spread of businesses
both this month and year to date. We are also reassured that the returns are
primarily driven by stock specifics rather than any one factor or macro bet.
The net of the portfolio is around 110% while the gross is around 115%.

 

We thank shareholders for your ongoing support.

 

1Source: BlackRock as at 31 May 2024

 

21 June 2024

 

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.

 

 



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