Lindsell Train Investment Share Discussion Threads

[steve3sandal] 29/12/2023 15:18

I like your conviction and I hope you are right. Not quite enough to push for a seat on the Board though there may be one available following our Chairman’s retirement if that’s the correct word. Shareholders have had a miserable year and whilst this sometimes presages better returns (opportunity to buy low) the holdings will need to improve earnings and the management company will need to earn higher AUM. Good luck to all holders.

[flyer61] 29/12/2023 12:10

More buying today....now own a 1000th of the Company :-)....surely the discount must narrow!

[flyer61] 20/12/2023 20:40

Am I the only one who has been buying here of late….

[flyer61] 14/12/2023 09:47

More thoughts.

AI will probably have a big negative impact on the fund management industry. That being said when your lunch is being eaten this industry in particular has shown a remarkable ability to reinvent itself.

I can for my calculations value the listed equity portion at say 3% below their NAV. All highly liquid investment grade securities. Doing that makes LTL look a lot cheaper to me.

Shame the market doesn't agree....maybe in time it will....

[flyer61] 13/12/2023 15:56

I've remodelled for a 20 per cent drop in the LTL dividend. So I make the income circa £12.5M all in for LTI. £1M for fees etc and you have £11.5M for divis.

£57.5 per share so a maintained dividend seems a real possibility.

Now if they could halt and reverse the FUM then we might get somewhere but as spec says what future for asset managers....even ones that are super profitable like LTL.

[spectoacc] 13/12/2023 11:26

Interesting both, thanks.

My question would be - is LTI on the up, or on the down? A few more years of underperformance and perhaps even the 10 year performance goes.

(There's a couple of debt funds yielding over 15% @giltedge, eg FAIR) ;)

But I agree everything has a price, albeit I don't think Mr Train has the special sauce anymore.

[giltedge1] 13/12/2023 11:04

Of course risks & admittedly 3 years of underperformance of funds, but no strategy works every year 5 Year & 10 year returns fine. LT valued at £ 280m currently, Polar Capital a bit larger FUM at the moment £ 440m. Current stake in LT valued at £72m, receive £10m dividend, 14%. I can't find any other business listed on LSE yielding that much & considering LT have a successful business model, Top 5 in terms of returns last 10 years. LT model if revenue falls, salary falls so cushioned from drop in FUM, discount covers risk in my opinion.

[flyer61] 13/12/2023 10:57

Thanks Spec, I have tried to model a few thoughts about LTL to see what it is worth in the 'market' and then what dividends it might produce for LTI.

For a shade under £16B of FUM their nominal market cap for LTL is £300M. This is punchy! even with the cash in the balance sheet.

You can buy Premier Miton for less than a £100M with 9 odd billion under management. It has a sizeable cash balance to boot. CLIG at MCap £157M with £9.0B under management and cash in the balance sheet.

If we assume dividends for LTL are 88 per cent of what they were for the last financial year then you get a £43M payout. £10 mill cash to LTI. Our valuation of LTL is £74M.

Now if I can buy in the market at a 15% discount to calculated NAV that £74 Million is £63M. Is £10M on £63M a good buy for me....certainly all the concentrated equities at this sort of discount makes sense to me. But does LTL....is my 12 per cent cut in the dividend paid by LTL enough of a factor??

All modelling thoughts good or bad! gratefully received.

[spectoacc] 13/12/2023 09:35

Hmmm.. :)

The problems are all still there. Key man risk. Inability to change course. Fantastic ZIRP-era performance, below average since.

c.38% of what you're buying is the LT Ltd co, controlled not by you, run in whose interests? Fund managers are dirt cheap atm, for a reason - money will keep leaving the markets for the foreseeable IMO.

Nothing much wrong with the equity holdings I agree, except possibly valuation. Recession may or may not be around the corner (-0.3% GDP today, but only one fig), but eg DGE struggling already.

So - is the discount large enough yet. And what is the L-T business really worth, in cashflow terms as it'll seemingly never be realised.

LSEG, Nintendo, DGE, RELX, ULVR, Mondelez, BAG, Heineken. An argument for just buying those?

[flyer61] 13/12/2023 09:26

Giltedge, I agree with you. Overall the underlying share portfolio seems a good collection of businesses and if Spec gets his way and we have a recession then they are the ones to own.

What I am looking into is how does the value of the Fund management business compare to others in this sector. I.e. is it now fair value (or even cheap??)compared to where it was before.

Have been buying in the £830's and is now the families biggest holding....tempted to continue buying and hold my nerve. Must be limited downside, no gearing and LT has plenty of cash.

Would like to see the board do something to narrow the discount (twice yearly dividend, buy back, improve the trusts visibility etc) however they strike me as very much a group of people who won't be told.....

[giltedge1] 13/12/2023 08:51

FUM up this month end November albeit marginally 0.2B, LSEG, RELX, EXP & Sage doing brilliantly, at or near ATH, unfortunately DGE & BURB in a dip, in common with other luxury brands currently, looks short term, still churning out good profits & high margins. Looks a bargain at £ 8.40 & NAV £9.60, I have plenty already but tempted to sell other holdings & add.

[essentialinvestor] 08/12/2023 15:28

Hi Spec, BOOT 2024 FY consensus looks too high to me - that may already be in the price, or not (find out at the next update).

Added a few FGT yesterday as rhe NAV discount neared the top of its usual range.

[flyer61] 08/12/2023 15:06

Well just bought in the 830's....12 plus per cent discount to NAV.

I expect in time this will end up in FGT.

The board are Patsies so i'm not holding my breath that things will change dramatically anytime soon.

As to the need to raise salaries....words fail me..

[spectoacc] 08/12/2023 14:53

Ha yes.

Good call on BOOT bottom (for now!) @EI.

[essentialinvestor] 08/12/2023 14:41

FGT looks safer to me, but mught be wrong.

They may have to raise pay levels, eh.

[spectoacc] 08/12/2023 14:33

Does Nick still have the special sauce, in the post-ZIRP world? The evidence says not.

Half an argument for FGP (stocks) over LTI (1/3rd ageing fund management business) these days?

Hold neither. Nor, unfortunately, MSFT ;)

[flyer61] 08/12/2023 13:57

Microsoft is my largest holding.....so it is not all bad!

[flyer61] 08/12/2023 13:29

Buying today at 840's through gritted teeth......

[flyer61] 05/12/2023 20:47

Thanks S3s. I’m not at my computer as there is quite a bit I’d like to say!

Barring catastrophe I think they will hold the dividend next year.

The TSmith comment about ROC At 20 per cent always outs I agree with. The question for me is has he picked the right companies in this small investable universe….no Novo Nordisk no Microsoft.

And spare me please…it has been ‘gruellingR17; in the fund management industry. One thing the FMI is not is gruelling. Certainly not with the coin these people pull.

At a ten per cent discount to NAV there are probably worst places you could invest.

[steve3sandal] 05/12/2023 19:39

LTI HY 30/9 were published this morning. No shares were bought or sold though the commentary suggests they have topped up Diageo post YE. Declining Monthly NAV have pointed the way so not much by way of new news. A couple of statements caught my eye. 1/ the usual possibility of dipping into revenue reserves to maintain the dividend profile (my words). 2/ the manager remuneration cap 26% of income can only be increased by a shareholder majority vote of 90%. That’s a decent threshold and if I’ve understood correctly might limit the rate at which our LT shares are sold to those succession managers.
LTI reported a statutory loss because the net assets fell more than their income. The same again dividend of £51.50 would cost £10.3m. HY revenue income was £6.687m (£7.793). The fall was wholly down to the reduction in dividend from LT. Assuming that they repeat HY1 in HY2 and ignoring Corp Taxation as an IT, I’d speculate FY income revenue of £13m, Expenses £1m, Net Revenue £12m. Paying out 85% of this would cover £51.50.
That’s not quite right as Cash and Cashflow is required to write a cheque. They have closed HY with £3.75m Cash.
Revenue reserves are down to £18.8m but that still £94 p/share. However, these must be substantially invested in the portfolio and aren’t covered by cash in the bank (and I’m not sure I’d want that cash drag if it were my portfolio).
In summary, I’m a little more hopeful we might get a same again distribution than the £40 I previously thought the LT numbers would point to.
Just need the holdings to rerate, AUM to improve, and the discount to close and this time next year we still won’t be millionaires!

[giltedge1] 24/11/2023 16:23

From memory latest purchases
Remy Cointreau bought 2018 flat, was well up until recent pull back luxury goods.
Man United up made extra on USD as well.
Experian well up, bought 2020.
PZC down as noted. So of the 4 one down over 5 years.
Sold Pearson too soon, was improving business.
Can see logic RMV virtual monopoly, good cashflow, low Cap Ex.

[spectoacc] 24/11/2023 07:59

RMV the latest (rare) new Nick Train punt. Hopefully do better than several of his other recent trades, like PZC, or selling PSON far too late, or BAG. Or HL, tho can't see that in any Top 10's now?