BlackRock Throgmorton says it generated a 19.85 return on net assets over the six months ended 31 May 2015 – ahead of the 15.7% return posted by the Numis Smaller Companies excluding AIM and investment companies index. Shareholders did even better as the discount narrowed taking their return to 23.8%. The interim dividend has been increased by 37.5% to 1.1p.
The long only portfolio increased in value by 18.1%, outperforming the benchmark index by 2.4%. Net gains in the CFD portfolio amounted to £5.8m, 2.5% of opening net assets. Gains on long CFDs were 3.7% of opening net assets and were partly offset by losses of 1.2% on short CFDs. These figures are all before costs which were 0.8% of opening net assets.
The long only portfolio benefited from strong share price performances from CVS Group, Savills, Fevertree Drinks, Incadea and Betfair. The largest contributor to relative outperformance came from CVS Group, which operates veterinary surgeries around the UK. Interim results showed sales up by 19%, with like for like sales growth of 10%, and earnings per share growth of 34%. CVS Group
management continue to grow their veterinary business both organically and by mainly small bolt-on acquisitions. The company still has only 11% of the UK veterinary surgery market. Savills performed well throughout the period and full year results showed that earnings per share rose by 28%. A subsequent AGM indication was that trading has been slightly ahead of expectations. We see Savills as a strong brand in property services with an increasingly global footprint. Fevertree Drinks share price has performed well since its IPO late in 2014. The company’s full year sales were up by 49%, all organic, and we see significant potential. Incadea was subject to a takeover bid late in 2014. Betfair’s third quarter revenues were up by 20%, the fourth consecutive quarter of double-digit growth.
The largest detractors from relative outperformance during the period were holdings in Northbridge Industrial Services and Polar Capital Holdings. Northbridge was impacted by the decline in the oil price which is affecting their rental operations in Singapore and Dubai, and the company’s oil tools business in Australia. Forecasts have been substantially reduced. Polar Capital’s share price has underperformed a strong market as the company has seen outflows from its large Japanese fund, whilst many of their other funds have seen net inflows. We believe that the company remains well placed to grow the funds under management over the medium term.
THRG : Bumper period for Throgmorton as CFDs pay off