Market Thinking

making sense of the narrative

A Black Block from Blackrock at THG

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In recent months I have found the comments below THG stories in the Times to be quite useful as they have been in dramatic contrast to the recycled PR puff pieces above the line – indeed many of them pointing out the until recently utterly uncritical coverage of Magic Matt Moulding and his friends from Softbank. So when we heard the latest shock – that Blackrock had a block of 55m shares for sale via Goldmans, we thought we would look into it a little, since this was an unusual story even by the standards of the THG boys. Commenting at the Times, I received a reply to one of my comments this morning and was alerted to the fact that it might be Alistair Hibbert, who recently stepped down from managing the two active European funds in order to concentrate on his hedge fund and sure enough, thanks to Bloomberg we find the stock as at the end of September. Between them, the two funds hold 44m shares in THG, approximately 40% of the total holding by Blackrock disclosed by the company itself.

Here are the two funds in question, pretty much evenly split, the investment approach is lifted from the literature on Blackrock’s website and the screen grabs are from Bloomberg.

1) BlackRock European Dynamic Fund 23m shares

Investment Approach

The Fund aims to provide a return on your investment (generated through an increase in the value of the assets held by the Fund) over the long term (5 or more consecutive years beginning at the point of investment). The Fund invests at least 70% of its total assets in the equity securities (e.g. shares) of companies incorporated or listed in Europe, but excluding the United Kingdom. Depending on market conditions, the Fund will invest in equity securities of companies that are, in the investment adviser’s opinion, undervalued (i.e. their share price does not reflect their underlying worth) or have good growth potential.

Blackrock European Dynamic Fund Investment Literature

Blackrock Continental European Flexible Fund 21m shares

Investment Approach

The Fund aims to maximise the return on your investment through a combination of capital growth and income on the Fund’s assets. The Fund invests at least 70% of its total assets in the shares of companies domiciled in, or the main business of which is in, Europe excluding the United Kingdom.

Blackrock Continental European Flexible Fund Investment literature

So far so good (ish) but then something caught our attention;

According to their own literature neither fund is allowed to invest in shares listed in the UK

Perhaps Blackrock can explain why one of their Star Fund managers (thanks to his hedge fund he apparently earns nine figures according to Bloomberg) was able to buy 10% of the float of a UK listed company with sufficient governance questions that it was not entitled to a FTSE listing by splitting the ownership between two funds, neither of whom had a prospectus that allowed it to invest in the UK? And please tell me that the Hedge fund isn’t short.

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