BlackRock Throgmorton Trust Plc - Portfolio Update
PR Newswire
LONDON, United Kingdom, January 29
The information contained in this release was correct as at 31 December 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 December 2024 and unaudited.
Performance at month end is calculated on a cum income basis
| One | Three | One | Three | Five |
Net asset value | -2.6 | -3.6 | 5.0 | -26.7 | 7.9 |
Share price | 0.0 | -3.3 | -1.6 | -35.5 | -6.1 |
Benchmark* | -0.1 | -1.6 | 5.0 | -15.4 | 6.6 |
Sources: BlackRock and Deutsche Numis
*With effect from 15 January 2024 the Numis Smaller Companies plus AIM (excluding Investment Companies) Index to Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies).
At month end | |
Net asset value capital only: | 648.68p |
Net asset value incl. income: | 664.87p |
Share price | 593.00p |
Discount to cum income NAV | 10.8% |
Net yield1: | 2.6% |
Total Gross assets2: | £573.1m |
Net market exposure as a % of net asset value3: | 108.1% |
Ordinary shares in issue4: | 86,196,864 |
2023 ongoing charges (excluding performance fees)5,6: | 0.54% |
2023 ongoing charges ratio (including performance | 0.87% |
1. Calculated using the Final Dividend declared on 05 February 2024 paid on 28 March 2024, together with the Interim Dividend declared on 24 July 2024 paid on 21 August 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 17,013,000 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 | 34.5 |
Consumer Discretionary | 16.5 |
Financials | 16.4 |
Basic Materials | 7.2 |
Technology | 5.9 |
Real Estate | 3.8 |
Telecommunications | 3.7 |
Consumer Staples | 2.3 |
Health Care | 1.7 |
Communication Services | 1.5 |
Energy | 0.5 |
| |
Net Current Assets | 6.0 |
| ----- |
Total | 100.0 |
| ===== |
|
|
Country Weightings | % of Total Assets |
|
|
United Kingdom | 90.8 |
United States | 4.4 |
Ireland | 2.9 |
Australia | 1.2 |
France | 0.5 |
Canada | 0.5 |
Sweden | (0.3) |
| ----- |
Total | 100.0 |
| ===== |
Market Exposure (Quarterly) | ||||
| ||||
| 29.02.24 | 31.05.24 | 31.08.24 | 30.11.24 |
Long | 117.9 | 114.9 | 111.7 | 111.9 |
Short | 3.2 | 2.3 | 2.7 | 3.4 |
Gross exposure | 121.1 | 117.2 | 114.4 | 115.3 |
Net exposure | 114.7 | 112.6 | 109.0 | 108.5 |
Ten Largest Investments | |
| |
Company | % of Total Gross Assets |
|
|
Breedon | 3.0 |
Grafton Group | 2.9 |
Tatton Asset Management | 2.8 |
Rotork | 2.8 |
IntegraFin | 2.7 |
Hill & Smith Holdings | 2.7 |
Gamma Communications | 2.6 |
Oxford Instruments | 2.6 |
Bellway | 2.5 |
GPE | 2.5 |
Commenting on the markets, Dan Whitestone, representing the Investment Manager noted:
The Company returned -2.6% in December, underperforming its benchmark the Deutsche Numis Smaller Companies +AIM (excluding Investment Companies) Index which returned -0.1%.1
Global stock markets finished December on a weaker note. Macroeconomic data from the US was mixed but generally better - manufacturing PMIs (Purchasing Manager Index) and non-farm payrolls in particular - which catalysed a further rise in bond yields. Unfortunately, one can't say the same in the UK where most data points continued to weaken in the aftermath of Labour's budget, whilst bond yields and key funding rates continued to move in the wrong direction. This negatively impacted our domestic UK exposure in December, in particular housebuilders, property and retailers. Whilst we had taken steps to moderate some of our positioning here in the aftermath of the budget, liquidity permitting, these exposures accounted for the majority of the underperformance within the portfolio during the month.
In terms of contributors, the largest during the month was a short in a UK listed semiconductor business that fell circa 40% to an all-time low on the news of a very dilutive convertible offering as the company attempts to try and strengthen its balance sheet. We closed some but remain short. Shares in Raspberry Pi rose 70% in the month on no news. Though we are fans of the company and management team we were surprised by this move and struggle to comprehend a valuation of 77x price to earnings in the context of so many undervalued shares in the portfolio, so we took the opportunity to exit the position fully. Shares in Irish housebuilder, Cairn Homes, performed well, and post month-end the company has reported solid trading for the full year, with growth ahead of previous guidance.
Turning to the detractors, as mentioned above many of the largest negative contributors during the month were UK domestic businesses such as Victorian Plumbing and Workspace Group, which fell on no stock specific news-flow but caught up in a wave of domestic selling pressure on U.K. macro economic fears and rising bond yields. Shares in IntegraFin fell sharply despite strong FY24 results and Management reiterating FY25 guidance so we think this more reflects the perils of releasing a trading statement on 18 December 2024 and limited liquidity. It seemed an incredible overreaction for a company that has continued to demonstrate ongoing market share gains and net inflows despite a difficult backdrop. With the shares now on c.19.5x 09/25 falling to <19x 09/26 and with a net cash balance sheet and a multi-year secular growth story we think they offer compelling value and we have continued to add. Thankfully the company has released a trading statement in early January 2025 showing ongoing market share gains and positive net inflows and the shares have recovered some of the losses from December.
As alluded to last month, the outlook for the UK has deteriorated since the UK budget. The growing momentum witnessed in the U.K. through the first half of 2024 has been completely upended, with growth, consumer confidence and business confidence all taking significant hits. We continue to engage with companies and it is clear from these interactions that the additional NI costs (specifically the lowering of the threshold to bring so many more transient workers into the catchment) will have direct consequences which are likely to be felt more through cost savings (job losses) than price increases. As one UK Industrial said to us "our customers don't care about a specific UK tax increase being passed on to them, and we can't undermine our competitive position versus US and Asian competitors". As for obvious sectors like leisure, retail and hospitality, the competition may well be domestic but there is a limit on ability to pass on prices due to the softening consumer backdrop and competitive backdrop. This is an area we have moderated long exposure and have added shorts, particularly those that have the additional headwind of raw materials costs that need to be imported which will be negatively impacted by weaker sterling. As for housebuilders and RMI exposed names, we didn't buy the immediate sell-off but have just started adding to some of the market leaders in these areas, e.g. Bellway trading below 0.7x TNAV after several years of depressed housing volumes, where we see compelling long-term value despite a cloudier backdrop.
Reflecting the greater risks to the UK outlook both in terms of growth and inflation, the gross exposure remains lower than normal levels at around 110%, whilst the net of the portfolio is around 105%.
We thank shareholders for your ongoing support.
1Source: BlackRock as at 31 December 2024
29 January 2025
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.
