Lindsell Train Investment Share Discussion Threads

[mozy123] 18/12/2018 15:07

yes you are itcf. But its probably cheap. Will leave you to find out why.

[ifthecapfits] 18/12/2018 14:46

Am i reading this right - this trades on at a 43% premium!

[spectoacc] 09/7/2018 13:43

@Mozy123 - death? There's certainly Key Man risk, irrespective of "new managers could do it".

Hopefully Train & Lindsell will never fall out, perhaps after a few years of massive underperformance ;0)

[mozy123] 09/7/2018 13:40

Nick Train himself admits doing very little, portfolio churning wise. He reads and reads and reads. Why would he retire? He loves what he does, and to be a multi millionaire for reading. Why stop. :)

[topvest] 09/7/2018 09:13

I hold this partly because of the Lindsell Train stake. I think its prudently valued and so the premium is warranted. Its frankly quite ridiculous / excessively cautious to assume that Lindsell Train will cease trading when the two founders retire as their strategy can be handed over to the new managers coming in to the organisation.

[mozy123] 09/7/2018 08:54

Nice not steve, hold the same view, but dont own LTI. LT Global Equity, finsbury and Fundsmith make up 40% of my assets.

[steve3sandal] 08/7/2018 22:34

Just a quick check in. The IC recently suggested selling LTI and switching into their Global Equity UT as the premium was extremely high. This followed the Directors recent warning that buyers should understand the risk of buying at a large premium when issuing their 31 Mar Accounts. The share price has indeed come off by about 10% since the Accounts were published.
Meanwhile, since 31 Mar Lindsell and Train have overseen a 10% increase in AUM to £14.7Bn and the directors valuation of the asset management business has increased about 10%. Not a bad effort in these 3 months. 30 June NAV is £813, so premium is probably back just under 20%. The succession risks were well discussed in the Accounts. I recently bought some more and I certainly didn’t get them off Lindsell or Train. Any further share price weakness and I will be having some more as I am in the camp that thinks the Management company is undervalued in the NAV calculation.

[spectoacc] 26/3/2018 16:26

A few more "look at my lovely smile and stubble" articles on Train, but nothing new there.

[mozy123] 26/3/2018 16:26

Yes I did wonder what was going on here.

[spectoacc] 26/3/2018 15:57

A bit... strong?

[steve3sandal] 27/11/2017 20:27

I am not put off by the premium here. I have traded it many times over the years. Selling some last year over £900 and buying back this year at £732. The discount is now as tight as I can recall for sometime. LTI valuation is well disclosed in the recent half year Accounts being an average of 2 methods. My quick mental calculation using their DCF method alone has the NAV of this trust about 8% higher than stated. Valn 1.5% of AUM is pretty conservative IMO. I am bought into their methodology, and the future of their brands, and I will try and pinch some more if the share price continues to drift to £750. Just my view.

[jonwig] 27/11/2017 06:57

Citywire on LTI:



Not a holder (put off by premium) but do hold FGT.

[spectoacc] 10/11/2017 07:41

Seems a missed a stock on a lunatic premium - ALPH:

"As at 30 September 2017 the NAV is negative 58.8 pence per share. The decrease in NAV from 30 June 2017 (negative 57.2 pence per share) is mainly due to the loss incurred in the period."

[mozy123] 09/11/2017 11:37

People selling stock due to burberry slump?

[peterdabbler] 09/11/2017 10:40

well what's the latest dips about?

[ccnp] 04/9/2017 09:54

Specto, what was the one trick? His call on Albert Fisher?

[topvest] 31/7/2017 21:17

I like investing in fund managers. Hold most of them. Impax are my favourite at the moment. Polar, City of London Investment Group and Miton are all nice.

[mozy123] 31/7/2017 20:32

Without a doubt topvest - they are not churning stock and adding up fees that's for sure. I have a lot of FGT and fundsmith along with individual holdings in unilever, Diageo and Sage to same a few overlaps. Cant really see me changing my approach.

I think the fund management industry is a great area to invest in. Train likes Rathbones and Schroders.

Any managers you like topvest? I did admire hendersons before its take over but never invested. Might be easier to buy some Guinness asset managers fund.......

Really like HL but the valuation puts me off.

[topvest] 31/7/2017 18:50

Yes, I don't like the performance fee either, but I do like Nick Train and Lindsell Train. I would invest in the asset manager if it was listed and so this is the main attraction of the trust. It's also zero cost for me as I've sold 2/3rd of my original holding at very nice profits. Think Nick Train is probably the most influential U.K. Investor. Particularly like the fact that he has only invested in about 1 new company in a decade...magnificent! Probably a little extreme, but underlines how poor and short-term most active asset managers really are in the U.K.

[mozy123] 31/7/2017 16:49

The only problem I have with this trust is the performance fee. The benchmark is some long dated gilt benchmark. I wouldnt have a problem if it was an equity index, but all that seems to happen is that LTI gets a dividend from its 20% holding in the manager (37.5% of LTI assets) and pays it all back as performance fee. A wonderful setup for Train and Lindsell as majority holders of LT Ltd with an nice income flow into LT Ltd from LTI.

We are essentially sacrificing the income in the hope that AUM continues to climb at LT Ltd and thus the capital valuation of the manager.

One could argue however that the performance fee paid to LT Ltd from LTI increases the valuation of LT Ltd at the margin of 11.76 times the fee! / 2 / the 20% LTI owns. a £2.8mil fee creates £3.3mil icnrease valuation.....

Worth paying and riding the Lindsell train Gravy Train!

I doubt very much they will change this set-up.

[topvest] 31/7/2017 14:52

Agreed. That's why I think the Chairman should stop warning that the premium is unjustified. Just because they have taken an exceptionally cautious approach on the valuation doesn't mean others should see it this way. I don't see any reason why Lindsell Train Limited can't continue for another 20 years or so with some suitable succession planning on getting others to do much of the legwork and marketing.

[mozy123] 31/7/2017 14:04

They use 8.5% discount rate in the accounts to value the fund manager.

1/8.5 = 11.76 P/E (£213,613,325)a

But the valuation is dragged down abit by the 1.5% (134,020,411)b

Company val (a+b/2)/2666 shares = £65201 per share

1.5% valuation at of May factsheet was around £9bil in aum but this has now increased to £10bn

the market is assuming the valuation of the fund manager is 1.5times higher than the directors think. 37.5%/100 = 2.67 * 18.5% prem = 50% on the fund manager.

I still think LTI is undervalued.

Hargreaves Lansdown is valued at 7.5% AUM!!!!!!!!!!!!!

[topvest] 03/7/2017 17:41

He's 58 so a fair point if he retires. I suppose he could stay on in a Non Exec Chairman type role rather than trash what he has worked for. Think they are developing their team anyway. Bottom line is that it's not a career where you have to retire as such, particularly given his do nothing but read style.

[spectoacc] 03/7/2017 14:48

Don't disagree - they're been somewhat disingenuous with their "..Trading at a substantial premium" warnings.

However - Mr Train will retire eventually, and if that article I'm probably misquoting is to be believed, then it's not that far away. I reckon he's aged 59? I know Buffett & Charlie Munger are way older but neither has said they'll quit.

I'm also suspicious of any outperforming managers - nothing lasts for ever, as Anthony Bolton so memorably demonstrated (FCSS), and as Neil Woodford may be in the process of proving! The sort of bond proxy long term winners that have done stupendously for the likes of Terry Smith & Lindsell Train won't do well forever.

As for only one buy/sell in 5 years - he could have done with selling Pearson! :)

I digress - my point is, the stake in the fund manager relies on the key man risk of two getting-older blokes, as well as the continued outperformance of LTI. Makes me think an 8% earnings yield isn't an unreasonably valuation for it.

[topvest] 03/7/2017 14:11

Yes, fair points. Remember that Mr Train has an ability to do very well from doing nothing though. My sort of person! He has only chosen one new share to invest in over 5 years, I think. He could therefore continue to be a fund manager in the Buffet style for another 30 years! All depends whether he wants to give it up. Lets be clear though that the premium is not really investor stupidity. It's because the market values Lindsell Train Limited more highly than management's valuation on an 8% trailing dividend yield. Think they should be more honest on that rather than just warning everyone to sell. If they think it really is overvalued then they should be issuing shares or selling their own shares. They don't do either because they have always wanted to retain a high weighting to the fund manager and not dilute their own interests in a very valuable asset!