Interim Management Statement
26 Abril 2012 - 11:28AM
UK Regulatory
TIDMBHUE TIDMBHCF
BLACKROCK HEDGE SELECTOR LTD
Interim Management Statement - period from 1 January 2012 to 31 March 2012
To the members of BlackRock Hedge Selector Ltd
This interim management statement has been produced solely to provide
additional information to shareholders as a body to meet the relevant
requirements of the UK Listing Authority's Disclosure & Transparency Rules. It
should not be relied on by any other party for any other reason.
This interim management statement relates to the period from 1 January 2012 to
31 March 2012 and contains information that covers this period, and up to the
date of publication of this interim management statement.
BlackRock Hedge Selector Ltd is a closed-ended investment company structured to
issue a range of classes of Feeder Fund Shares, each of which will provide
investors with exposure to the performance of an investment fund managed by
BlackRock. The Company had total assets of GBP60.4m at 31 March 2012.
At present the Company only has one class of Feeder Fund Shares in issue, the
UK Emerging Companies Shares, which provides investors with exposure to the
performance of BlackRock UK Emerging Companies Hedge Fund Limited, a Cayman
Islands domiciled fund managed by BlackRock which was launched in May 2004 and
had net asset value of $1.358 billion as at 31 March 2012 (source: BlackRock,
unaudited).
In addition, the Company has in issue a class of Cash Fund Shares which
provide, via investment in the BlackRock Institutional Sterling Liquidity Fund
(a sub-fund of the Institutional Cash Series plc), exposure to a portfolio of
short-term money market instruments. At 31 March 2012, the Institutional
Sterling Liquidity Fund had a net asset value of GBP28.4bn billion (source:
BlackRock, unaudited). The Cash Fund Shares are designed partly as a conversion
option for holders of Feeder Fund Shares who may wish, from time to time, to
reduce their exposure to the BlackRock UK Emerging Companies Hedge Fund.
Stock Performance
Performance
31 January 29 February 31 March 28 September
2012 2012 2012 2009 to
31 March
2012*
UK Emerging Companies
Shares
Share Price GBP1.1950 GBP1.1913 GBP1.2075 n/a
Net Asset Value per share GBP1.2327 GBP1.2556 GBP1.2526 n/a
Discount (3.1%) (5.1%) (3.6%) n/a
Share price performance (0.4%) (0.3%) 1.4% 20.75%
NAV performance 0.4% 1.9% (0.2%) 25.26%
NAV performance excluding
launch costs 0.4% 1.9% (0.2%) 26.21%
Underlying hedge fund -
NAV performance 0.4% 1.9% (0.2%) 27.4%**
Cash Fund Shares
Share Price GBP0.9925 GBP0.9925 GBP0.9925 n/a
Net Asset Value per share GBP1.01758 GBP1.01768 GBP1.01780 n/a
Discount (2.5%) (2.5%) (2.5%) n/a
Share price performance 0.3% 0.0% 0.0% (0.75%)
NAV performance 0.0% 0.01% 0.01% 1.8%
Underlying cash fund -
monthly gross annualised
yield 0.7% 0.8% 0.8% 0.8%**
* launch 28 September 2009
** based on estimated performance data from 30 September 2009 to 31 March 2012
Manager's Review
UK Emerging Companies Shares
The UK Emerging Companies NAV returned 2% over the three month period to 31
March 2012 in comparison to the underlying hedge fund, which returned 2.1%. The
share price increased by 0.6% over the same period and the share rating stood
at a discount of 3.6% at 31 March 2012.
The BlackRock UK Emerging Companies Hedge Fund is an equity long short fund
that focuses primarily on UK Small and Mid Cap Stocks but also invests up to
20% in FTSE 100 stocks. The Fund Managers use a bottom up fundamental approach
to build the portfolio and leverage off the wider UK Equity research platform
to drive investment decisions. The strategy seeks to identify companies with
strong management expertise that will generate superior growth rates over time.
The flexibility of smaller companies to adapt to changing market conditions is
a place to add value when researched and positioned appropriately. The Fund
seeks to
maximize total returns while limiting correlation to the broad UK equity
market. We believe that the small and mid-cap UK market provides above-average
long term growth and our objective is achieved through a research-intensive
investment process and a risk-controlled, diversified portfolio.
Portfolio characteristics
Long Positions 88
Short Positions 87
Total Positions 175
Top 10 Long Holdings
Company Sector
Oxford Instruments Industrials 2.5%
Senior Industrials 2.4%
Brammer Industrials 2.4%
Booker Group Consumer Services 2.4%
Spirax Sarco Industrials 2.2%
Rathbone Bros Financials 2.2%
Spectris Industrials 2.1%
Spirent Technology 2.1%
Victrex Basic Materials 2.1%
SDL Technology 2.0%
Total 22.4%
Sector Breakdown
Sector Long Short Net Gross
% % % %
Basic materials 3.8 (0.8) 3.0 4.6
Consumer goods 3.0 (3.7) (0.7) 6.7
Consumer services 11.3 (8.0) 3.3 19.3
Financials 7.5 (3.5) 4.0 11.0
Healthcare 2.5 (1.5) 1.0 4.0
Industrials 27.4 (15.2) 12.2 42.6
Oil & gas 4.4 (0.4) 4.0 4.8
Technology 10.3 (1.2) 9.1 11.5
Telecoms 0.0 (0.6) (0.6) 0.6
Utilities 0.0 (0.6) (0.6) 0.6
Total 70.2 (35.5) 34.7 105.7
Source: Blackrock. Exposure shown as a % of NAV.
Market Cap Breakdown
Market cap Long Short Net Gross
% % % %
0-0.1bn 7.4 (0.3) 7.1 7.7
0.1-0.25bn 9.2 (2.7) 6.5 11.9
0.25-0.5bn 7.2 (7.6) (0.4) 14.8
0.5-1bn 20.3 (7.6) 12.7 27.9
1-2.5bn 23.1 (9.9) 13.2 33.0
2.5bn + 3.0 (7.4) (4.4) 10.4
Total 70.2 (35.5) 34.7 105.7
Source: Blackrock. Exposure shown as a % of NAV.
Cash Fund Shares
The Cash Fund NAV performance was up by 0.03% over the three month period to
31 March 2012 and the share price performance was up by 0.25%.
The underlying Institutional Sterling Liquidity Fund seeks to maximise current
income consistent with the preservation of principal and liquidity through the
maintenance of a portfolio of high quality short-term "money market"
instruments, and returned an annualised yield of 0.8% over the three months to
31 March 2012.
The portfolio invests exclusively in first-tier securities, which include
commercial paper, certificates of deposit, floating rate notes, time deposits
and fully collateralised repurchase agreements. The fund must maintain 50% of
its holdings with a short term rating of A1+/P1 with the remainder in A1/P1.
Portfolio characteristics
Portfolio composition % S&P Rating %
Certificates of Deposit 28 A-1+ 66
Financial Company Commercial Paper 19 A-1 32
Government Agency Repurchase
Agreement 18 AAA 2
Fixed/floating medium term notes
issued by banks or corporates 14
Treasury Debt 7
Time Deposits 6
Asset Backed Commercial Paper 4
Other 4
Total 100 100
Maturity distribution
Days
1-7 26%
8-30 16%
31-90 44%
91-180 14%
Total 100%
Share Conversion between Share Classes
The Company's Articles of Association provide for holders of UK Emerging
Companies Shares to convert all or part of their holding into Cash Fund Shares
on a quarterly basis. Conversion requests in respect of 20,000 shares were
received in respect of the March 2012 Share Conversion Date for UK Emerging
Companies Shares to be converted into Cash Fund Shares.
Based on an NAV of 125.261p for the UK Emerging Companies Shares at
31 March 2012, and a NAV of 101.78 for the Cash Fund Shares at the same date,
and after accounting for conversion costs, a total of 24,245 Cash Fund shares
were issued, and admitted to trading on 12 April 2012.
The deadline for receipt of the June 2012 conversion elections for the UK
Emerging Companies Share Class was 18 April 2012. Conversion elections in
respect of 1,526,000 shares to convert into the Cash Fund Share Class at the
June conversion date.
The deadline for the next conversion date of 30 September 2012 will be
19 July 2012.
Material Events & Transactions
Annual Report
The Company announced its annual results for the year ended 31 December 2011 on
26 April 2012.
Net Asset Value
The Company announces its estimated NAV on a weekly basis, and this can be
accessed on the London Stock Exchange Website.
The most recently released unaudited net asset values for BlackRock Hedge
Selector Ltd were at close of business on 20 April 2012 and amounted to:
UK Emerging Companies Share Class - 127.54 pence
Cash Fund Share Class - 101.786 pence
There were no other material events or transactions, except as disclosed above,
during the three months to 31 March 2012, or up to the date of this
announcement, nor was the Company involved in any other material transactions
during the period except the purchase and sale of securities undertaken in the
normal course of its business.
BlackRock (Channel Islands) Limited
Secretary
26 April 2012
END
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