|Fair point @MF, though all gurus will stumble at some point - hence big premiums for future outperformance seem unjustified. Eg a -10% year for LTI could easily knock 30% off the price, with the effect on the valuation of the management co, the double effect on the NAV, and a reduction in the premium. -30% and still trading at a premium!
I've long had a dislike of T Smith from something that happened with a stock I held, but perhaps FEET a good example, bailed out only by the £ collapse (the rise been since late June).|
|Terry Smith did run the Collins Stewart pension scheme for quite a while and was a very highly regarded analyst in the 80s. Much more than a one trick pony imo. I agree that is takes a whole cycle to really judge performance, but with Fundsmith having nearly tripled in 5 years, it could manage a big setback and still be top quartile.The thing about Fundsmith and LT is that they have looked expensive for a long time and have continued to go up. No prizes for sitting on the sidelines in this game. I bought a load in 2013 and have held off buying since, thinking it must come back down...|
|The one thing to think about with Nick Train is that he has only made one new buy decision in the last 5 or 10 years. It's not as if he needs to work that hard to keep things going!|
|Agreed; have a big holding in LWDB, particularly ISA'd.
However, did more research on LTI yesterday. It's a curious beast - pays performance fees to the co that makes up 33% of its NAV, and a large part of the outperformance is the rise in value of that co! ie it's effectively highly geared - the more LTI does well, the higher the performance fees and also the more external money goes to LindselL Train Ltd. Has led to stellar growth, and in truth they've not valued it too highly - I reckon (and don't rely on my reading of both sets of accounts) at a p/e of approx. 8, when probably nearer 16 if listed.
Ignoring, of course, that both honchos are in their 50s. Munger & Buffet average age over 80, fwiw.
So - if Mr Lindsell and Mr Train continue to pick well (not including PSON last year), the management co continues to do well and LTI continues to do well. If I'm right that p/e 16 is more realistic than p/e 8, for something growing so fast, then that's 33% onto the NAV in an instant.
Still overvalued, but probably by about 15-20% rather than 57%.|
|Crazy premium to NAV. Look at LWDB as a parallel but its on a discount of 11% including its in-house business.|
|I see they rather sensibly changed the management fee as being calculated on "the lower of NAV or shareprice". Personally I'd like to see that as a law for all ITs. Some with dubious NAVs (eg smallcap funds, valuing holdings at bid that they wouldn't even be able to flog at a 50% discount) can end up getting a management fee on twice the shareprice.
But - isn't the LTI premium now out of control? I'm not a fan of "gurus", be it Anthony Bolton (), Neil Woodford (small pharma fiascos) or Nick Train, who like Terry Smith has been brilliantly right for owning the bond proxy "brand" cos, but won't necessarily continue to be brilliantly right.
According to HL the premium is 57%; I fail to see how a 33% holding in two-man band Lindsell Train can justify that. Nor can holding a handful of stocks I could easily buy myself, that seem as likely to underperform from here as outperform - DGE, ULVR, LSE, BAG, Nintendo, RELX, Heineken, Mondelez.|
|Looking good lately|
|Sold a third of mine this morning. Rest are effectively £nil cost. Valuation seems a tad racy so taking the opportunity to recycle some of my holding into a better value investment trusts. Won't sell the rest though.|
|Good results again. Chairman has warned stakeholders about buying the shares at a premium..unusual behaviour for a Chairman, but honourable all the same.
"I reiterate the cautionary comments I made to shareholders in last year's annual report, first about the risk to the NAV from a sharp fall in markets given the size of holding in LTL and second to caution potential new shareholders to think carefully before buying the Company's shares at a premium to NAV, which as I write is at 6%. This has fallen from higher levels late in 2013 but it is worth pointing out that if the investment in LTL continues to grow in importance above 25% of the NAV the share price of the Company will increasingly be determined by investors views on the value of that asset and less by conventional reference to the NAV."|
|The spread is also rather high.|
|You don't often see a Board saying the premium is too high...very unusual!
The first six months of the Company's financial year continued as last year's ended, with the Company's net asset value rising more than the benchmark and world equity markets. The NAV was up 7.8%, the benchmark 1.9% and world markets measured by the MSCI World index in Sterling up 0.6%. What has changed more is the share price. It was up 28.4% and at the end of September was trading at a premium to NAV of 21%. The Manager wrote about the premium in its September monthly update. The Board would like to support and reiterate some of the comments, and in particular would caution new investors buying shares at a heightened premium to NAV. In time the premium may contract and there is a risk that the shares will trade at a discount in the future. Should that occur at a time when markets are weak and the NAV is falling the loss of value for investors buying at a significant premium could be material. Also, it would be wrong for existing investors to celebrate a high price that results from a large premium. The Manager's annual management and performance fees are calculated on the market capitalisation of the Company not the NAV. Calculating the fee on the market capitalisation was designed to align the Manager's interests with shareholders, recognising that investment trusts have generally traded at discounts. This works to shareholders' advantage when discounts exist but that advantage is reversed when a premium prevails.
Aside from communicating our concern and reiterating that the price the Board ascribes to its holding in Lindsell Train Limited is realistic and not undervalued (as some shareholders have suggested), there is little the Board can do to help resolve the situation other than issuing new shares. In previous statements, I have commented that the strong growth in LTL's business is much to be welcomed as is the greater strength and depth which the business is developing, but LTL remains significantly dependent on its two original founders and on continued good investment performance. The Board is currently reluctant to issue more shares as we believe this would dilute shareholders' interest in LTL, hitherto the most important and value creating asset the Company owns.|
|Some chart analysis:
|Yes, absolutely. It's just won a £100m Witan mandate for example.|
|I have held these shares since they launched at £100 and bought more when they dipped briefly below par.
They are a very solid investment and Nick Train is an astute reader of the markets who follows trends and invests for long term growth. The holding in the Lindsell Train Fund Business is indeed a Jewel and I would suggest that it has quite a value currently and will appreciate further as the funds under management continue to grow.|
|Yes, good point. 25% investment in Lindsell Train could be worth a bit at some point. Valued at £1.9m at the moment. All the assets are pretty solid, except Marston's.|
|Yeah, I've been accumulating over the past 6 months. I used to be in the business and have met Nick Train many times from his GT days. Always an impressive speaker and certainly knows his onions. The trust also holds a position in the Lindsell Train holding company which may be the "jewel in the crown" sometime down the line.|
|I thought that I would start a thread on this extremely cautiously run absolute return trust. I've recently added a few as I think Nick Train appears to have a solid investment record.
The trust's objective is "To maximise long-term total returns subject to the avoidance of loss of absolute value and with a minimum objective to maintain the real purchasing power of Sterling capital, as measured by the annual average yield on the 2.5% Consolidated Loan Stock."
Nick Train appears to have a "Buffet for the UK" strategy.
Anyone else hold?|
|I think ADVN have the wrong share price clarky..coreect price per share is £172..so div yield 1% not 100% :))
the company reports make interesting reading... definitley from the buffet/graham school of investing !|
|Can someone explain the dividend payout for lindsell train|
|Can someone explain the dividend payout for lindsell train|
|The same thing happened today.|
|Hilary, It was not just ADVFN, I checked other sites and they all said the same (not that it matters anymore)
Not that I can specifically recall, but considering advfn's site problems over the last few days ............|
|Well, now I know as well!|