BlackRock Throgmorton – AGM update

In yesterday’s BlackRock Throgmorton (THRG) annual general meeting, manager Dan Whitestone outlined what he sees as the significant potential for a surge in UK small and mid-cap valuations to outstrip those in the large cap sector when the macroeconomic backdrop in the UK improves.

Dan says that UK companies’ share prices have become increasingly detached from their earnings potential, through a combination of political uncertainty, sticky interest rates, strength in overseas markets (in particular in a handful of big AI-related US tech names), and consistent outflows from UK-focused funds has weighed on valuations.

Following this, Dan believes that the UK small and mid-cap sector is at one of its most attractive entry points in recent memory. We observe that Dan may not be alone in this view, with the UK market being subject to elevated levels of takeover activity.

Despite this backdrop, THRG has still been able to generate long-term out outperformance versus its peers and benchmark.

THRG’s board, have increased its share buyback activity but THRG’s discount remains at a historically wide level and so could potentially offer investors a way to capitalise on a near-term bounce in UK equities, if this occurs as Dan expects.