The information contained in this release was correct as at 28 February 2023.  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 28 February2023 and unaudited.
Performance at month end is calculated on a cum income basis

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.

1. Calculated using the 2022 interim dividend declared on 20 July 2022 and paid on 26 August 2022, together with the 2022 final dividend declared on 10 February 2023 and payable on 31 March 2023.

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 2,096,000 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 2022.

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 2022.

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).

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

The Company returned -0.5%¹ in February, underperforming the Company’s benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index which rose by 0.4%.¹

After a strong start to 2023, February was more mixed. Markets remain transfixed on inflation data and the path of future interest rates and remains highly volatile to any perceived changes in either. February demonstrated both sides of this volatility. The month started with a Jerome Powell press conference that was widely interpreted as dovish, at the time the US yield curve implied a peak rate of 4.9% in June. By the end of the month, after a series of worse than expected inflation statistics and more hawkish noises from central banks, the yield curve implied a peak rate of 5.4% and the timing of the peak pushed out 3 months to September 2023. Though the data was less positive in February, US CPI (Consumer Price Index) still recorded its lowest year-on-year increase since October 2021 in January at 6.4%. We still think that inflation has peaked and that the prime contributor to core inflation today, namely shelter, is a lagging indicator and will begin to decelerate through the year. Economic activity remains resilient, with continued resilience in labour markets and in consumer spending, which continues to be reflected in corporate news flow overall. Furthermore, at the company level, in the UK and in Europe the body language and general tone from CEOs has markedly improved in recent months i.e. since the nadir of “Trussonomics”, reflecting a combination of factors from lower energy costs, further supply chain improvements, resilient customer demand (corporate and consumer) and overall just a general feeling that life isn’t quite so bad, so “guarded optimism” feels far more appropriate right now.

The biggest detractor was Watches of Switzerland, which fell on the back of their third quarter results.  While the sales growth slowed down in Q3 vs H1, this was expected and predominantly driven by jewellery, which fell by 2% mainly on the back of the company’s own decision not to discount and to hold its price premium vs competition. Luxury watch sales continued to grow at 22% and the company continued to grow market share in this category with waitlists for core models continuing to extend. We had a useful call with management following the statement and they are as confident in the growth outlook as ever. Following the fall, the shares now trade on a mid-teens multiple of current year profits, with a net cash balance sheet, and a long runway of growth, so it remains a core holding. Not owning oil services business John Wood Group detracted from relative performance as the shares rallied in response to a bid from Apollo Global Management, which the subsequently rejected. Shares in D2C retailer of swimming pool supplies in the US, Leslie’s Inc fell in response to soft quarter results. The challenging economic backdrop has impacted discretionary demand, and rising costs have created an additional challenge, however management did reiterate guidance for the full year.

The largest positive contributor to performance was homeware retailer, Dunelm which reported strong sales growth in its first half, which are more than 40% higher than pre-pandemic levels. Management highlighted the unpredictable outlook, however guidance remained unchanged as they believe the business will be well placed to continue to drive growth through market share gains and emerge from this challenging period in a stronger position. Shares in Oxford Instruments continued to move higher, benefiting from the positive sentiment towards industrials, and Baltic Classifieds rose into the end of the month despite no stock specific newsflow.

We continue to look to the year ahead with cautious optimism. In general, corporate updates are continuing to deliver positive surprises, particularly where expectations are so low (notably UK consumer and light industrial) which leaves the door wide open for further positive surprises in our mind. We also take some comfort that in recent weeks we’ve seen strong corporate/ financial delivery rewarded with rising share prices, unlike most of last year, which bodes well for our investment process more generally and indeed our long book. A combination of rising share prices and changing industry patterns and customer behaviour has given us more confidence in the opportunity set within the short book, particularly amongst financially leveraged companies. As a result, we’ve been adding new positions (both long and short) to the Trust in recent weeks. We don’t think the next few months will be easy, but we feel increasingly more confident on our positioning and process. The gross of the Trust is c.110% with the net around 106%. We thank shareholders for their ongoing support.

¹Source: BlackRock as at 28 February 2023

29 March 2023

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.