BlackRock North American has published interim results covering the six months to the end of April 2016. Over the period the company produced an 8.0% net asset return per share (‘NAV’) compared with a return of 7.5% in the Russell 1000 Value Index. The Company’s share price return was 11.1% over the
same period (all figures in sterling terms with income reinvested).
The Company’s revenue return per share for the six months ended 30 April 2016 amounted to 2.55p compared with 2.27p per share for the six months to 30 April 2015. The first quarterly dividend of 1.10p per share was paid on 4 April 2016. A second quarterly dividend of 1.20p per share will be paid on 1 July 2016 to shareholders on the register on 20 May 2016. This represents an increase of 9.5% on the payments over the compatible period in 2015.
The manager’s report says the largest contributor to relative performance during the period was stock selection in the consumer discretionary sector. Notably, positions in non-benchmark holdings McDonald’s and Dollar General proved to be beneficial as each company reported stronger than expected sales and earnings growth. Stock selection in health care also contributed to relative returns for the period – specifically, not owning benchmark holding Allergan, which came under pressure after the U.S. federal government scuttled its merger with Pfizer. Not owning benchmark holding Kinder Morgan, a pipeline company, and an overweight to exploration & production operators Hess and Pioneer Natural Resources, also proved to be beneficial for holdings within the energy sector. Lastly, an overweight position to the aerospace & defence industry boosted relative returns for the period.
The largest detractor from relative performance was stock selection and allocation decisions in financials. First, an overweight position in the banking sector hurt relative returns, with notable detractors including portfolio holdings Citigroup and Wells Fargo. Second, stock selection in the
insurance industry detracted from relative returns as our overweights to life insurers MetLife and Prudential Financial were negatively impacted by further declines in long term interest rates. American International Group, a property and casualty insurer, also underperformed after announcing weaker than expected quarterly earnings. Stock selection in the metals & mining industry also negatively impacted relative performance. In particular, not owning gold producers Freeport-McMoRan and Newmont Mining detracted from performance, as each company benefited from a sharp rally in gold bullion prices during the period. Lastly, stock selection in the consumer staples sector modestly hurt
relative returns, as benchmark-only holding, Walmart Stores, rallied during the period.
The Company’s option overwrite component enhanced the portfolio’s income during the period. However, writing covered call options in a rising equity environment detracted modestly from absolute performance.
BRNA : BlackRock North American helped by holding in McDonalds