Blackrock would not name the company it shorted.
However, fund manager Dan Whitestone said in the monthly portfolio update: “The largest contributor was from a short position in a UK wholesaler of alcoholic beverages, which in the space of a couple of weeks issued negative profit revisions, announced an unexpected tax bill to HMRC, an increase in its net debt position, a failed capital raise, before finally filing notice on its intention to appoint administrators and warning that “shareholders will receive little to no value”.”
Conviviality announced on 5 April administrators from PwC had been appointed and the Nomad for the Aim-listed company, Investec Bank, had resigned. Several weeks earlier it had announced it had identified a £30m bill owed to HMRC, which had not been accrued for within its short-term cash flow projections.
While Blackrock would not name the short positions that were the strongest contributors to performance, it said Fenner, YouGov and Dechra Pharmaceuticals were the best performing long positions.
The investment trust has also initiated a position in Tatton Investment Management.
The investment trust’s March portfolio update revealed the discretionary fund manager for financial advisers is looking to expand its services to a much wider client base.
Miton Group and Liontrust are already significant shareholders in the DFM, with a regulator filing from February showing the former had reduced its stake from 5.32% to 4.72%, while the latter has been increasing its stake, with a filing from March showing its stake increasing from 10.97% to 11.05%.
The investment trust also upped its stake in Melrose, which is now its largest holding at 3.3% of the portfolio. The company won a hostile takeover battle for engineering rival GKN on 29 March. Fund managers had been split on the deal in the lead up to the shareholder vote.
In March, shareholders in the closed-ended UK smaller companies fund voted for the fund manager to be able to invest up to 15% of assets in non UK listed stocks, primarily in Europe, and to scrap its 35% cap on Aim-listed securities.
Effective from 22 March, the £354m investment trust is benchmarked against the Numis Smaller Companies including Aim index, having previously used the Numis Smaller Companies excluding Aim (excluding investment companies) index.
In the update for March, the investment trust blended the benchmarks to reflect the new benchmark adopted during the period. The resulting benchmark fell 0.9% over the period, while the investment trust’s NAV rose 0.2% over the period.
Whitestone, who has been sole manager on the investment trust since Mike Prentis handed over the reigns to focus on the Smaller Companies investment trust, attributed positive stock selection in both long and short positions to outperformance over the benchmark during the month.
