Lindsell Train Investment Share Discussion Threads

[spectoacc] 14/6/2023 13:38

@giltedge1 - I have done, but taken a slight loss due to the stamp duty.

Good luck holders - I still rate (most) of the holdings, but have upped the size of the discount I need before I get back in.

IMO the Train/LTI glory days are behind them, albeit you'll never lose your shirt. Maybe someone once said the same about Buffett, but he's the exception that proves the rule (& it's Charlie Munger I'm the fan of, Buffett without the PR).

[giltedge1] 14/6/2023 10:35

Just to update stats, P&L £55M after tax latest LT Accounts YE 31/01/2023 at end of yesterdays results.
FGT 5 Yr 26% 10Yr 140% May 2023 fact sheet.
Man U takeover going through, small holding in Global Fund, adds to sentiment strategy correct. Most major holdings now steady or rising.
@specto can sell out if negative as you bought a few days ago @998, quick profit.

[flyer61] 14/6/2023 10:15

Indeed….more humble pie eaten…

Do you ever think things are stacked against the average Jo in Britain…

[spectoacc] 14/6/2023 08:17

Just an aside - "Hargreaves Lansdown were right". Suspect we've just got to the bottom of that one.

[spectoacc] 14/6/2023 08:10

If you want to see how the bearish pro's are positioned, can well recommend a quick look at the Top 10's of PNL, RICA, CGT. Those are nearer to where I want to be atm (been buying Gilts in size).

[flyer61] 14/6/2023 08:06

Think I might just buy Caledonia instead….they appear to play with a straight bat..

What’s good for old man Cayzers descendants is probably ok for me too…

[flyer61] 14/6/2023 08:02

Those pesky foreign holdings like MSFT and NOvo Nordisk would have looked rather nice in LTI!

S3S, when you express your displeasure to the Sec why not mention it might be better for ALL shareholders that they look at a trade sale for our LTL stake….

[spectoacc] 14/6/2023 07:58

Fundsmith much harder to replicate - foreign holdings, trades in & out constantly (eg Dominoes; Amazon). LTI/FGT are small number of holdings, rarely changed, with only the L-T business impossible to replicate - and now it turns out we maybe wouldn't want to :)

(And the few foreign holdings - tho WT can be avoided on some).

[flyer61] 14/6/2023 07:47

‘Discretionary salary cost base’……this!

Having tried to replicate Fundsmith in my SIPP it was not easy and I eventually gave up and settled for 10 direct holdings.

I hadn’t fully appreciated how much of LTL’s lunch has been eaten by others like Premier Miton etc.

[spectoacc] 14/6/2023 07:32

Or just buy the FGT Top 10? Something you can't do with LTI (unless you work for L-T).

Good points - IMO if they wanted to incentivise staff, get them to buy LTI shares - they'd get the stake in L-T and benefit from their custodianship of the IT.

Could well argue whether LTI - as a minority shareholder in L-T - is being treated equitably.

(Good point re p/e, most ignore tax but it's always post-tax).


Edit - Heineken & Mondelez would be the only tricky ones (withholding taxes etc), but buying RELX, DGE, BRBY, LSEG, ULVR would get you more than half of FGT, without the 0.63% ongoing charge. Add SDR, EXPN, SGE for another 20%.

Didn't include divis in FGT performance - has done slightly better but still fairly naff.

[steve3sandal] 14/6/2023 07:23

I think the £55m will be pre tax so you should really take 25% off that for PE multiples. The £55m is partly a function of their earnings but then subject to what I would call a discretionary salary cost base. We can talk around the numbers all day but there is an intention to transfer part of our LTL holding to employees at a discretionary rates, now 15% profit share (8%) but could be any number. I will try and figure out what that looks like once LTL Accounts are available, usually September. Like someone said earlier they held LTI for a share in LTL and so did I.

I don’t think it is right to profit share transfer 75/25 ratio. I know that was the ownership ratio. Quoted LTI repeatedly stated this 25% holding is to participate in the success of LTL, later this 24.2% holding is to …. Never going to win a debate or vote with majority owners but I’ll probably fire off a very cross email to the Secretary. I can’t make a London AGM but perhaps they’ll take an email question? At the end of the day LTI economic interest in LTL is going to be reduced even if LTL isn’t successful as it’s 15% of profit in shares even if their investment performance is less than average.

I’m guilty of spending too much time on LTI and it turns out there is something of a value trap. Strategically I should probably tilt from this Co to FGT. Hmmm.

[spectoacc] 14/6/2023 07:18

Hmm thanks @Flyers61. Isn't lost on me that I've bought for the first time just as most of what I've been saying on here for years is coming true :) Train's a quarter billionaire - good on him, but the problem with the fund management industry is the fees don't come back to you when the performance reverses.

Bond proxies, change to the risk-free, reversal of valuation/premium when times are tougher - but still happy to be in at a discount.

Re FGT - +7.5% over 5 years, is positive now at least.

[giltedge1] 13/6/2023 23:19

10x earnings is £550m 10x £55m so 25% is well over Directors valuation, as stated. Granted 2023 not started well but for a concentrated quality portfolio can change very quickly, hopefully up.

[riverman77] 13/6/2023 19:42

Looks like LTL is currently valued at the equivalent of about 10x earnings (I know they have their own formula but to keep it simple I like to use this measure). I'd say this is more than enough relative to other listed fund managers, and given LTL is currently in outflow and very key man dependent. On that basis, FGT might be the better and simpler option right now.
Don't hold either at moment but keeping a close eye as suspect quality/growth will come back into favour soon as US inflation and rates fall.

[giltedge1] 13/6/2023 16:10

EPS 61, Div 51.5 so fully covered with room to spare. 2 years div in reserves. Mgt fees fully charged to income unlike other inv trusts charge at least 50% to capital. So a clean P&L. Stake in LT valued at £85m Polar Capital same AUM as at 31/03, 25% £137m, so a good £50m short or 25% NAV. Also positives LT Mgt Co. £100m cash, 2 years div again in reserve. Underlying holdings all trading well, LSEG, RELX & now Nintendo pushing higher last few days MDLZ a star last 5 years. So keeping the faith. But of course need FUM to start pushing back to £20B, to create positive sentiment. I am fully invested, so would need a meaningful gain in FUM to add.

[essentialinvestor] 13/6/2023 11:06

FGT NAV discount is approx 4% ATM, given falling AUM you could make a case
that LTI is pretty fairly valued ?.

[mozy123] 13/6/2023 10:27

Wonderful - they are going to be selling LTL shares at a low to the employee bonus schemes.

The only reason to hold LTI is for exposure to LTL.

Hmmmmmm

Overtime this is just going to turn into an FGT?

[flyer61] 13/6/2023 10:13

I bought these for the long game so had better just get on with it...the sun is shining so should really be out enjoying it...

Thanks S3S

[steve3sandal] 13/6/2023 09:37

I can help with that. Jan 22 Salaries were about £25m to Lindsell and Train if I remember correctly. There’s a brief unaudited but undoubtedly correct insight into LTL numbers as part of this announcement. PTP LTL Jan 23 was £55m down from £65m. The FUM have gone down very significantly from retail withdrawals and they’ve lost a mandate too though that wasn’t the cause of the recent devaluation. I suspect the methodology change was more about succession and the creating an effective stake in LTL for key staff. I totally get that but the most important thing in investment management is to be right. Unfortunately they haven’t been right for several years now and retail investors generally switch to alternate performing strategies. There’s a lot of comfort in the quoted portfolio in that several shares are now around ATH and there’s nothing fundamentally wrong with the others which would prevent them from getting back there. Except PayPal which whilst not broken is finally more realistically priced. Hopefully we are wiser and will eventually be right!

[flyer61] 13/6/2023 08:30

When you do Spec...have a look where all the LTL profits are going.....

[spectoacc] 13/6/2023 07:55

They do say:

"..As the LTL dividend now represents 84% of the Company's total revenues (a much higher percentage compared with earlier years), depleting revenue reserves to simply maintain the dividend without some assurance that those reserves would soon be replenished might not be in the best interests of shareholders"

and I think there's honesty in acknowledging the divi will likely be cut again next year.

I need to read it all thoroughly, but won't happen today.

[flyer61] 13/6/2023 07:52

Hmmmm.....yep hat eating as I type. Disappointed is an understatement. Having thought the management (owners) were playing with a straight bat I am now not so sure.

[steve3sandal] 13/6/2023 07:24

Hmmm. Results and perhaps more importantly the profit share plan have more clarity in this commentary. Not got time to study it all yet but whilst succession is partly being looked after private shareholders won’t ever get to own one of those yachts. I wouldn’t be surprised to see some selling this morning.

[spectoacc] 13/6/2023 07:22

"A final dividend of £51.50 per Ordinary Share (2022: a final dividend of £51.12 and a special dividend of £1.88) is proposed for the year ended 31 March 2023."

"The Board proposes to pay a total dividend for the year to 31 March 2023 of £51.50 per share which represents a small 0.7% rise in the ordinary dividend from £51.12. No special dividend will be paid this year as LTL did not earn any performance fees."

"It represents a 2.8% fall in the total dividend"

"We do not know what 2023 will bring for LTL, but at current levels of FUM the LTL dividend is likely to fall again in its year ending January 2024."


Enjoy your hat breakfast @Flyers61 ;)


This was interesting:

"As the share transfers resulting from profit share awards increase, so the utility and importance of LTL's valuation expands from primarily determining a monthly price for LTL's shares to becoming the price that governs the transfer of value between founders, employees and the Company."

[flyer61] 12/6/2023 09:19

Dividend will go up by 5% - I'll eat me hat if there isn't a rise.

12% of SIPP, you are over diversifying ;-)