Lindsell Train Investment Share Discussion Threads

[essentialinvestor] 15/2/2023 18:37

Thanks for the reply.

[mozy123] 15/2/2023 16:29

ML keeps buying.

[steve3sandal] 15/2/2023 16:00

They’ve thrown a few new things at the valuation of LT. A new matrix and now they are incrementally charging a notional 25% Corp Tax at LT, it’ll be 25% after March and stop there I guess. Even though AUM has gone up a little it’s not improved the directors public valuation. In fact LT will still pay 19% on Jan 23 profits in October 23, and 25% on Jan 24 profits in Oct 24.
A week after LT YE Jan 23 Michael Lindsell started topping up his personal holding. He will have a good idea what LT is worth. Obviously it’s all about succession here and holding stocks that go up.
I’m maxed out currently.

[essentialinvestor] 15/2/2023 14:37

Why is NAV lagging the wider bounce back in equities over the last few months ?.

Valuation of the investment business..

[andyadvfn1] 10/2/2023 09:13

Man Utd takeover talk

[andyadvfn1] 10/2/2023 09:05

Fair assessment CCNPMan take over talk should give small lift to SP?Good entry point at 1000, more upside than down here for the patient. 5% divi later in the year to boot.

[spectoacc] 16/1/2023 09:54

We agree on everything except Bolton, @topvest ;)

Thanks @contraian joe. Agree Buffett (AKA Charlie Munger's sidekick) the exception that proves the rule. Pity one is 96, the other 99.

One thing I will hold my hand up & acknowledge - I absolutely didn't expect the FTSE to be pushing new all-time highs this month.

[contrarian joe] 13/1/2023 15:58

Giltedge1. Might be appropriate to go back a few years when Specto called the shift out of expensive growth into value well before the market cottoned on.You can't argue with TS performance over the last decade, (low interest rates helping enormously),let's judge him in 5/10yrs time in a different environment,the only funds that's having a large % of my money when the time is right will be Warren Buffett.

[topvest] 13/1/2023 14:55

I agree that Nick Train's execution has been poor of late: Fevertree, PZ Cussons, Pearson and Cazoo all being notable examples. He's still worth following though for a 10% per annum return. Just think he should exit the smaller positions. In no way is he comparable with Woodford, who was a disgrace.
Bolton was great the whole way through in my view, but just a bit unlucky with his China timing which came good as soon as he retired. Terry Smith is a top notch manager and better than Train in my view. However, his integrity is questionable - I think it is out of order to deliberately mislead everyone in his Fundsmith LLP accounts by sending c£250m to Mauritius every year. It's pretty obvious that he hasn't got a £250m cost base in Mauritius. Its just not the correct sort of behaviour that you would expect from someone with high integrity and earning c£100-200m a year.

[giltedge1] 13/1/2023 14:31

LTI up to £ 1,100 today, recommended at £ 9.80 in December 22.

Also Recommended shadowing NT in September post;

Hl at £8.50 ( I paid £8.00), Specto said go to £6, today over £9.

Fevertree £ 8.50 today over £10, Specto said go down!

Also ULVR up 12% 2022, SDR up over 20%, BARR up 15%, my trades all posted.

I think I will stick with Nick. My mistakes mea cuppa, buying property too soon,
& not sticking to NT & Terry Smith, would have retired if I had.

Spectos predictions below.

9/9/2022
13:10 HL really ought to be benefitting greatly from rising interest rates - that they're still so weak is a worry, & £6 looks next stop.

FEVR will p/w again IMO, bizarre how Mr Train can't see that one. Then again, he has a track record of falling in love with a share.

Not a fan of gurus, as much as not a fan of Train.
spectoacc
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09/9/2022
12:48 Went to meeting Alex gave a good presentation on companies & strategy & Nick gave a great talk as usual,very informative. US business growing, about £2 Billion (institutions, not retail). Asked questions on poor performers (not held by this trust), Fevertree £8.80(surprisingly very positive) one to watch & HL £8.50(meeting Mgt today, holds more assets then next 5 added together) two to watch?.
Keep buying.
giltedge1

[spectoacc] 10/1/2023 07:14

Thanks @topvest - agreed.

Personally I am - and have always been, from Anthony Bolton to Neil Woodford to Terry Smith to Baillie Gifford to Nick Train - anti-guru. Mean reversion the most powerful force in the market, and a period (even a long period) of beating the market leads to attracting more & more money, inevitable hubris, inevitable over-reach, and usually an associated fall.

Absolutely it means banging head against a wall for ages - particularly so with Woody, & in recent years with BG. But look how even T Smith performed last year, having bought into US bubble tech.

Woodford the most extreme example.

My issue with Train isn't his strategy - albeit "If you buy quality co, there's almost no price that's too much" is clearly nonsense - it's his failure to execute. Most of his recent punts have shown an inability to recognise we were in a 14 year bond proxy ZIRP market.

Fevertree is not Diageo. Hargreaves Lansdown is not London Stock Exchange. PZC? Man Utd, granted he may yet do well, but football another bubble.

Hindsight has 20:20 vision, but how hard would it have been to think "multiples just keep going up & up for consumer stocks in this market, why don't I buy some co's that produce something utterly essential, on very low ratings, that have been around for years - big oil, or pharma".

Granted, you know what you're getting with L-T, but not convinced Train's actions have matched his words recently. That article really brought it home, as much with what was left unsaid.

[essentialinvestor] 09/1/2023 22:13

Any reason given for dumping PZC ?.

[topvest] 09/1/2023 19:37

He's ditched Pearson and PZ Cussons voluntarily this year, along with Daily Mail and Euromoney which were both subject to bids. I think he needs to tidy up the FGT bottom end of his portfolio and sell the smaller positions altogether:
- Cazoo: why didn't he sell these at the top as its a ridiculous loss making business where free shares were received when divested from Daily Mail? Now down c90% and probably going to zero as they can't even make a gross profit on a car sale let alone a net profit!
- Fuller Smith & Turner - too small a position.
- Celtic FC - why bother?
- Frostrow Capital - keep
- Young & Co - too small a position.
- LTIT - keep
He should be keeping the portfolio to 10-15 stocks as 90% value is in the top 11.
Recent picks such as Fevertree, PZ Cussons, Pearson sale all pretty poor versus Experian and Remy Cointreau.
Still supportive, but he's had a poor time of late.

[essentialinvestor] 09/1/2023 16:40

I bought a small amount of PSON last week,
finally appears to be coming together for the business. With cyclicals strongly in favour YTD, it may underperform wider markets for a bit, but hopefully not longer term!.

[spectoacc] 09/1/2023 07:04

Large page in ST Business section on Train yesterday, FGT really but relevant to LTI.

All the usual - but one thing jumped out like a sore thumb. Train's usual promotion of the co's that have kept going with the same products for often well over 100 years - Cadbury, Heineken - then later in the article a comment that his two big losers this year are down c.63% (FEVR) & c.37% (HL).

Well I never:

FEVR - founded 2005, listed 2014
HL - founded 1981, listed 2007.

Also no mention whatsoever of PSON, one of the FTSE100 best performers last year.

Worth a read anyway, whether fan or critic.

[giltedge1] 13/12/2022 13:41

Looks good value with NAV £ 1,038, topped up at £ 980 now hit my 10% limit.
Good recovery, in Man U (not held by this fund), HL, Sage & SDR. Chairman is buying, so hopefully a good 2023.

[spectoacc] 05/12/2022 16:04

Or Citywire:

[rndm355] 05/12/2022 16:03

LTI results and overview here:

[giltedge1] 23/11/2022 09:49

LT core holdings have done well since last FUM as at 31/10/22, LSE, ULVR, FGT, SAGE good % rises suggest positive FUM for November. Hopefully nearer £1100 by year end.

[giltedge1] 09/11/2022 10:27

Hello Essential investor, yes HL & SDR long term holdings in various funds, mainly UK fund. LT one of largest shareholders in HL. Both seem to be recovering after recent dips, both are considered buys by various brokers based on long term wealth accumulation outlook. LTI has broken back over £ 1000 & looks on a positive path now.

[essentialinvestor] 17/10/2022 18:20

Is NT still as keen on HL and SDR?.

[giltedge1] 05/10/2022 16:53

Good to see Chairman Julian Cazalet buying on 30/09, a safe pair of hands. Performance 5 years, & 10 years, top quartile, last 3 years held back, but if you analyze all holdings over 10 years excellent. LTI state on website they are long term investors, preservation of capital important & not be judged over short periods. Stats distorted due to takeover approaches to LSE & ULVR meaning they peaked 3 years ago or so. Quality holdings & mainly USD earners, so dividends from holdings keep increasing.

[jamielein] 05/10/2022 08:41

I agree with your detailed analysis above. I did a similar exercise and came to a similar conclusion, but neglected the cash on the balance sheet (so that’s just a bonus from my point of view)
The fund management business does appear to be undervalued, but it’s all about future expectations, and we know that market conditions have deteriorated.
With LTI, there’s also the risk that the other holdings perform poorly, as it’s a very concentrated portfolio.
However I still think this is a good long term investment so continue to hold.

[steve3sandal] 01/10/2022 19:48

Lindsell Train Jan 22 Accounts have now been filed. I thought the numbers were very impressive and am a happy holder of LT via LTI. Everyone is rather more interested in the future than the past but I think worth recording Jan 22 for now.

In round numbers PAT was £65m (£62m). This is after £15m Corporation Tax (19%) and pouring £26m into the Directors pockets (principally Lindsell and Train I imagine).

Operating Expenses were 34% of Turnover (Fees), the same as 2021. LTI talk about increasing LT Staffing Costs in their own accounts but I imagine the 45% ?OpEx assumption in their LT valuation model is very conservative at least as Lindsell and Train Directors emoluments amount to £26m of the £34m Wages and Salaries within OpEx. Salaries may well increase and significantly as business admin grows, but in my opinion the valuation model assumption more than covers an army of admin, FM, compliance, research, analysts taking over the £26m buy well -do nothing Directors decision making model.

There is a small inconsistency in the filed Accounts as they did a 10 for 1 to 266,600 shares but still show 2022 holdings as 2021 level v 26,600. I may tell them.

Of £65m PAT, £53m was distributed in Dividends. LTI own 64,500 of 266,600 shares, 24.2%.

As regards the LT Balance Sheet they hold £72.8m of cash and £11m of other Net Current Assets. This is £3,210 cash per LT share which have a Book Value if £4,000 each. The Directors matrix valuation model of AUM and Model Profitability published monthly doesn’t appear to me to incorporate this cash or book value which effectively belongs to Shareholders. Shrugs as no formal Accountancy qualifications held.

So the business made £65m PAT to Jan 22. As at 31/8/2022 the Directors value each of LT’s 266,000 shares at £14,080.45 based upon annualised notional net profits of £39.7m to FUM of £19.2m. 266,600*£14,080 = £375m. Statutory Actual Post Tax PE of 5.76X.

I will play about with the LT numbers and the March 2022 LTI statements to form a view of their range of outlooks for Jan 2023. I doubt they will be better than 2022 as average AUM has fallen this year and they have amended LT Performance benchmark to a more realistic Global stock metric which will be more difficult to beat than the historic margin over Gilts. But I struggle to understand the directors valuation which discounts the cash on the £3,210 cash on the balance sheet and is after they have hit the profitability with c£25m of emoluments. I don’t begrudge them a penny of this.

I’d be interested in any observations at this stage as many heads are better than one.