Lindsell Train Investment Share Discussion Threads

[giltedge1] 28/4/2023 07:33

Thanks Steve for your opinion. Yes stars are aligning & hopefully AUM will return to over 20B, then market will respond. LTI dividend will be lower this year, hopefully LTIT will maintain their dividend £53, at last year's level with positive outlook. I also have a large weighting to fund, & shadowed portfolio, mainly UK stocks which strangely was more lucrative.

[essentialinvestor] 27/4/2023 23:46

Defensives getting some support with signs of macro weakness in H2 - should be a net positive for LTI and FGT.

[steve3sandal] 27/4/2023 23:19

Well yes, stars seem to be aligning for their strategies. I’m probably fully loaded now with 10% here and 10% in FGT. LT directors valuation has always seemed low to me but will continue to warrant some succession discount. If the funds start to outperform they will attract investment and that will create 2 kickers for AUM. That’s what I’m hoping for given I backed the truck up. NB it is a very small truck compared to Michael Lindsells truck. I’m looking forward to the LT manager accounts in due course and I’ll have another go at flagging the value there.

[giltedge1] 27/4/2023 12:13

Good result from ULVR this morning, RELX new all time high, LSEG over £ 80 again, MDLZ, BURB storming ahead, directors buying. LTIT refuses to go up with portfolio. Hopefully AUM up in April, I have added more today, whats your opinion Steve?.

[giltedge1] 21/4/2023 10:02

Management Company seems undervalued, compared to peers. Polar has same AUM but valued at £500M, Impax also valued much higher. NAV more likely £1200, than £1050.
Also Funds stabilised at £18.5B & slowly rising. looks likes retail outflows stopped &
more Institutional manadates, which makes AUM more stable. FGT has turned around. Good long term income share. Also added bonus of free advertising of LT, with Nick Train, always quoted in media.

[essentialinvestor] 20/4/2023 17:48

So they seem increasing keen on Experian,
the UK class action has been dropped (I think).

[mozy123] 20/4/2023 10:00

Indeed they do look cheap - it smells of overcharging for funds the huge profit margins these companies generate. ETFs don't seem to have disrupted this market too much.

[spectoacc] 20/4/2023 07:32

@Mozy123 - not that I'm aware of.

Have held LIO (sold too low) & POLR in past, as well as PMI & a couple of others, but in none atm. Yet they're all so cheap - single digit PE's and around 10% dividend yields. Market is saying there's trouble ahead.

Would certainly buy the managers over their funds :)

[mozy123] 19/4/2023 10:34

Specto - Is there a way to buy a basket of the UK asset managers?

What are you favs? POLR, LIO?

[steve3sandal] 17/4/2023 19:10

Possibly Fevertree, Burberry, HL are getting off topic as they are not held by LTI except as part of FGT sliver and implied through the asset management co. I have tried to keep the FGT thread alive but it lacks any wider interest with anything Lindsell or Train. I do follow the newsflow of LTI holdings and this counts as entertainment for me . Nintendo seems to be successfully reinventing itself but the share price gives it no credit at all. US ADRs can be bought easily on UK platforms. I’d suggest it’s as cheap as your Barr and HL. I also run a spreadsheet which gives me a regular nudge should the SP, discount, NAV get out of kilter though I can only update the cash holdings 6 monthly. I’m quick to download LT company accounts when they are published. So I’m certainly guilty of topping up and down a trading holding but I’d rather do than to shadow holding of the various LTI and FGT stocks. Good luck.
Meanwhile Michael Lindsell keeps buying, latest at £1025 and £1046. Last week Nick Train Spent £700,000 on more FGT. if only………

[giltedge1] 17/4/2023 10:14

Regarding FEVR, from memory purchased in Covid time, so March 20, which was about £9.00 to £9.50. Also US fund started March 20, has gone from £ 1 to £ 1.42 in 3 years. Other managers admittedly have done better, but okay for a buy & hold strategy. Regarding succession James & Madeline, in place I am sure founders will oversee many years to come, like Buffet, into 90's. I have tried shadowing portfolio but Stocks have gone up so quickly, BURB, FEVR & a few others, I missed buying in quantity. Which leaves only this trust, BARR & HL, at reasonable value.

[flyer61] 16/4/2023 10:59

interestingly it doesn't appear Train or Lindsell have produced any progeny that might be taking over the reins. So it will be succession and it will be people they have groomed. Not sure if it is a good or bad thing.

Little or no gearing...again individual preference if this is a good or bad thing.

In my case these are going in mine and my wife's SIPPs. The idea is that if I pop my clogs then she does not need to do anything but take the SIPPs income stream for the rest of her natural.

It helps that seven of the ten top holdings in Fundsmith make up a sizeable portion of my SIPP.

Replicating TS's fund is no easy task and is also expensive through dealing, spreads and fx. Ergo why I have tried to pick the Companies that will be around long after we are both dead.

LTI fits in at eventually 8-10% of our combined.

[steve3sandal] 15/4/2023 17:13

I think I recall from NT interviews he was very happy to start buying Fevertree at £10. Good manager following good manager, hmm. Not off the top of my head. I work in eons and my little team of managers are evidently coming to the end of their careers and me my eons, but I’m pretty comfortable that the investment process at those Trusts will continue. What would change upon succession is that the main manager wouldn’t be holding £millions of stock but I can work through that. Good debate.

[spectoacc] 15/4/2023 15:33

Was Nick's first purchase of FEVR at £8.80 then? Pray tell.

Performance data was from HL.

In 6 months the Vanguard FTSE 100 tracker has gone from £127 to £147, maybe I should have bought that?


@steve - agree succession is always looked at, but can you think of a case of a good manager being followed by another good manager - I'm struggling to.

[giltedge1] 15/4/2023 10:53

Regarding performance, not sure where Specto has obtained data, latest factsheet NAV FGT 3 years 33%, 5 years 40%
This trust 3 years 15%, 5 years 55%, 10 years 170%. Also see post 9/9 Nick advised buy Fevertree £8.80 Specto said go down now £12.80, 50% + divs in 8 months, not a bad return. Specto Got slightly right HL down slightly including Divs. Nick also advised at meeting buy ULVR at £36, now £43 + divs another 25%. Even safer FGT went from below £8 to £9, 15% again, good Mum & Pop share. Also not sure on Bond Proxy term, no such thing in my financial terms book, guess he means when interest rates go up bonds go down Then why are NT shares going Up?.BURB, SDR, ULVR, MANU etc. Anyway to the future Specto should have been buying Fevertree, FGT, ULVR, BURB, etc & made a good 25% in 8 months instead of knocking NT. The boat has sailed, Only reasonable ones lett are this trust LTIT & HL.

[steve3sandal] 13/4/2023 20:20

Succession is an issue but there does seem to be a plan with James and Madeline as management heirs.
Succession is an issue with much of my portfolio where I’ve invested in individual managers forever. However, the Boards and Managers have very obvious plans. Bruce Stout at Murray Intl has 2 capable joint managers, Jon Bennett at HEFT moving up and Tom Ohara the new key man, Job Curtis at CTY evidently has a key joint manager. When I listen to the younger managers talk about their holdings and rationales it’s like listening to the same old thing.
Lindsell Train Bennett Curtis have huge personal holdings which has always been a tick in the box for me. I acknowledge L and T is even more personal than the others but I wouldn’t think the end game is winding up. This always assumes the investment style still works in 6/7 years but I will at least have had 30% of my investment back in dividends and 2% AUM is still generally paid for moderate performance.

[spectoacc] 13/4/2023 20:09

There's absolutely some truth in the premium-back-to-par performance argument, but - and it's a big but - FGP always trades around par, and never swung around a huge premium.

Divi on FGT all of 2%, so not a lot of compounding being missed out.

Performance, after an OK recovery lately, is:

1 year - +8%
2 years - zero
3 years - +18%
5 years - also +18%.

As of a year ago, you'd made no money holding FGT over 5 years. Now you've made an OK-ish 18%, but that isn't knock-out, & doesn't encourages faith in L-T.

No L-T stake in FGT means you're getting a lot more concentrated exposure - RELX at nearly 12%, DGE nearly 12%, LSEG nearly 10%, ULVR nearly 10% - but why not just buy those shares?

Well, possibly because RELX's p/e is 26, DGE's 24, LSEG's 25, ULVR's 19, but the point still stands - if you like Train's stock-picking, why not save the fees and buy his handful of holdings.

I'm not sold on Train's stock-picking and have always accused him of riding the bond proxy trade over the 14 years of ZIRP. I've yet to see anything to change my mind, but I'd still buy at a large enough discount, because pricey though many of his holdings are, they're also solid co's, & I'd have them at a discount.

[riverman77] 13/4/2023 19:45

The poor share price performance is because it had been on a very large premium a couple of years ago but now disappeared - Train actually warned people not to buy at one point. Could be interesting on current valuation, especially if quality/growth stocks come back into fashion.
My difficulty is valuing the fund management business - cheap on a simple PE basis, but what are the long term prospects of the business? Essentially reliant on a single fund manager, who let's be honest is getting on a bit. Will it be worth anything when he retires, or will it be simply wound up?

[spectoacc] 13/4/2023 19:36

@Mozy & Steve - yes, but Train has repeatedly said it's valued fairly, so you've got to disagree with him to say L-T is undervalued. And does it have a future beyond L & T? And is recent performance - by which I mean the past say 5 years - indicative of a growing future?

Look at eg POLR - yield near 10%, p/e under 10 - and plenty of others. The argument used to be "look how much more cheaply valued L-T is than listed managers", now that doesn't really apply.

Not saying L-T is expensive - but am saying LTI deserves a bigger discount, on both concentration & performance.

I'd still like to buy eventually, but there's a lot of Opportunity Cost out there and tbh, I can't much stand Train :)

[flyer61] 13/4/2023 19:25

Things I like

The underlying 60 per cent of holdings are big quality Companies with moats.

The American stuff is great albeit they own over half the fund.

The Fund management business produces the cash for the decent dividend and it has plenty of it.

The dividend has grown for the last 10 years if I’m not mistaken.

Like STacc not impressed by the share price performance.

But if a decent discount appears then I’m going to increase my holding substantially.

Bought a few at £1006 today.

[steve3sandal1] 13/4/2023 18:58

You beat me to it M123. Off the top of my head that 6m £28m Net Profit you flag for months is after Lindsell and Train salaries and fees perhaps £12m. The made up LT director valuation just took in the final drag from modelling 25%corporation tax. In future any increase in AUM should flow into the valuation all things being equal. I'd certainly top up again at £1000. No volume traded, MMs setting price, wide spread but sometimes there is an overhang and they will sell you some on a tighter spread. share price gone opposite to underlying holdings this week so I guess mostly sellers. I'm watching closely

[mozy123] 13/4/2023 17:44

Its cheap specto.

Fund management business valued at 13,212 * 26555 = £350mil (notional basis)

Net profit at last 6 months - on similar FUM was £28.8m

So annual likely £58mil - call it £52mil for safety.

£45mil divi distribution

£350 less cash of £90mil in the business £260mil

45mil/260mil is a 17% free cash flow yield.

6 times economic earnings.

Its dirty cheap.

[spectoacc] 13/4/2023 16:49

For all my cynicism about L-T (T in particular), I would like an excuse to buy one day. But it's got to be on a larger discount than this.

Holdings:

L-T 40%
LSEG 8%
L-T N American Equity 8%
DGE 7%
Nintendo 6%
ULVR 4%
RLEX 4%
Mondelez 4%
BAG 3%
Heineken 3%

There's some conviction there - as always with L-T funds - but it's mainly to L-T the fund manager (fair enough, is the nature of the IT) and L-T the N American fund (hmm). I'm not sold on that, not for a 0.6% charge. There are some very cheap listed asset managers (who don't have aged gurus) and most of the shares can be easily bought for a one-off 0.5% stamp.

LTI -2% over 5 years, -12.5% over 3 years, -28% over 2 years. Figures from HL so all likely not with divi, but still. Trounced by a FTSE tracker.

[flyer61] 13/4/2023 16:40

Share price back to a grand....anybody buying on todays NAV update?

[giltedge1] 02/3/2023 15:39

Bought some more at £1,000 & 5% yield, seems goods value with FUM increasing 2023, ULVR, LSEG, RELX, MDLZ, DGE, SAGE all good results & most increasing dividends & or buybacks.
Underperformance last 2 years due to not holding commodity stocks, so hopefully will work in favour this year.