Lindsell Train Investment Share Discussion Threads

[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?

[giltedge1] 22/11/2023 15:50

Great movements today in LTI data stocks, Sage up 12% (not held by this trust, big in UK funds), Relx new ATH, LSEG & Experian up, also Nintendo going well. On downside DGE & BURB trading statements not well received by market, even though both still growing.

[flyer61] 15/11/2023 13:08

Cheapest I managed to buy at was £820....shame most of the rest was north of todays price.

[giltedge1] 24/10/2023 18:00

Hello SpectoAcc, looks like you called this one correctly, will take a long time to turn around, need some Nick Train magic.

[spectoacc] 24/10/2023 17:25

Suspect ego rules out a split.

Bottom line is that all asset managers are going to see drops in AUM IMO - money is leaving the market in droves, something like £50bn last year and going to continue with ZIRP over. QT, the end of TINA, the great yields on Gilts, and the cost of living crisis/lower pension contributions.

Pay your mortgage or keep your ISA/pension contributions up.

It'll turn, eventually, but my guess is 2025 at earliest.

[mozy123] 24/10/2023 16:59

I would start buying this if the share price wasn't £800 a pop.

A persistent discount may encourage a share split.

[giltedge1] 24/10/2023 15:24

Hello Steve,
Was told at meeting buybacks are off the table. Hopefully £8.00 is the low point, it was my entry point in 2020, I made a big profit. (those were the days). This trade £10. LT is sitting on £100m cash & £25m of that belongs to this trust, so when you subtract this amount from market price, you are buying well below NAV. Surely LT can make the £100m work?, last year negligible interest, surely this year £5m. I calculated on £16B AUM & assuming can earn £5M on cash pile, can still make over £40m after tax, as payroll is variable, so drops with lower income. Also portfolio made a much bigger contribution. But end of the day comes down to sentiment, so we need a gently rising AUM. would like to add at £8, but a bit overexposed, maybe beginning of next year as selling my buy to let.

[steve3sandal] 24/10/2023 11:44

Yooouuu bought too soon, some of us bought at £1200/£1100/£1000 in L12M though my average is much lower.
Throwing out a few figures. The valuation of our holding in LTI was c£75M on 30 Sept which is LTI HY as it happens. Yes it’s dropped like a stone.
At recent LTI NAV of £964 the current share price around £800 should prompt some buying by the Board I think. In fact a little co. buyback wouldn’t go amiss if they’ve £8M cash.
We will see. Authority is held but never done this.
Trading volumes are modest. MMs won’t want to hold stock which has a falling knife chart so even small sellers will see the Bid evaporate.
RSI is 21 just now so I’m expecting a bounce from the round number they just hit.

[flyer61] 24/10/2023 10:58

Bought to soon....sigh

[flyer61] 23/10/2023 15:03

Bought at £830 today. If the dividend is unchanged that would be 6.2%, however i'm hoping longer term that this is a reasonable price to pick them up at. How much more can the discount to NAV open up I wonder.....

[giltedge1] 22/10/2023 21:17

Yes AUM is critical to maintain dividend, at 51.50. They have enough in reserves to hold gor 1 year. Also accounts clean write off 100% mgt fees in p&l, none of this 50% mgt fees to capital wease. I note last 5 years distributed 90,%, so why not hold? That was the reason for doing so, to top up to maintain. Main problem is decreasing retail funds, retail investors are fickle & some sitting on big gains on LT trusts, last 5 - 10 years, so sell profitable ones ie LT funds & keep those underwater No logic but that's how it goes. Main portfolio holding up Relx, Ulvr, Sage ,LSE. But need a dramatic turnaround to maintain & increase Aum. Seems a tough call, but never say never. What can change? an emergency interest cut for example.

[flyer61] 17/10/2023 09:40

Thanks again s3s. Those assets under management at LT are critical along with how much L and T decide to pay themselves. I'm guessing L and T would like to keep it at £51.50 if they can.

[steve3sandal] 17/10/2023 07:58

So speculating that LT Ltd might only produce £37/38M dividends to LTI. We’ve still got 24.1% of this in LTI. That’s £9M but it was c £12M in the prior 2 years.
LTI Revenue was £14M with LTL dividend making up £12M of that. This time I’m guessing LTI Revenue might be £11M on the basis the rest of their portfolio does £2M again.
Take off LTL management fees which will be less than £2M but more than £1M I’m around £9M for our LTI dividend. Typically they say they have a policy to pay out 80% of Revenues, not sure how that works with IT 85%, but either way £9M is less than the £10.3M they distributed in Sept 2023 for £51.50.
An 85% distribution would be £8M which is £40 per share in Sept 24. They could and might do the full £9M or even too it up from revenue reserves though that’s not particularly sustainable or even desirable?
There is an inference in the March 23 accounts regarding valuing the dividend and it’s not impossible they top up from revenue reserves which were > £20M though they only had £8M in cash at YE.
My final guess is an LTI dividend between £40 and £51.50 in Sept 24.

[flyer61] 16/10/2023 20:08

Enjoy your beer!

[steve3sandal] 16/10/2023 18:26

Useless at formatting a table here so hopefully I can explain a guess of a 20% reduction in the dividend to LTI from the management Co in Jan 24.
Jan 22
TO 123M
Less admin* 44
PBT 81
Tax 15
Profit 65
Div 55 including 2 performance
* Directors Emoluments 27
other salaries and Soc sec etc 16
AUM a at YE 21.2Bn

Jan 23
TO 97M
Less admin* 30
PBT 67
Tax 13
Profit 54
Dividends 49
* Directors Emoluments 15
Other salaries and Soc Sec etc 15 ( Messrs L & T took full hit to maintain other salary expense at same level)
AUM at YE 18.6Bn down 2.5Bn

My extrapolation based on End Sept AUM £16.9Bn I think, say average will be down £2.5Bn with a flat Q4. Once you start writing these things you can’t save a draft to check.

Jan 24
TO 87 (might be higher than your guesses who knows?)
Less admin *30 ( same directors emoluments of 15, could they be flexed?)
PBT 57
Tax 14 (c25%)
Profit 43 (down from 54, say 20%)
Dividend 37/38 retaining what appears usual £5/6m?
That puts the dividend available to shareholders down about 25%.

Obviously LTI have other quoted investments which support the dividend but I suspect that the LTI receipts from LT could be down £10m. I’d have to look next at how that impacts us as LTI shareholders but I’m off about 5 minutes ago for my Monday beer.

[steve3sandal] 16/10/2023 17:13

[...]

Here are the Jan 23 Accounts for Lindsell Train. A significant fall in AUM led to a significant reduction in fee income. It looks like Messrs Lindsell and Train adjusted their emoluments more than pro rata down to £15m which enabled the dividend to themselves and our LTI to be held. Since Jan 23 the fall in AUM has continued and I’ll stick with ‘significantly’. The year is pretty well baked in if we think about average AUM fee income. So I’d guess the LT asset management dividend to LTI and the other 76/77% shareholders would have to come down significantly. I’ll guess first, 20% but I’ve not updated my spreadsheet. Welcome any sage views.

Sorry my attempt to link from Companies House via Tinyurl didn’t work. Anyway they are easily found as a public document and I have to admire the amount to tax they pay.

[flyer61] 16/10/2023 16:29

Where are we up to here. You can buy at £850 and change so a supposed 10% discount to NAV and a 6% yield.

Whilst realising the fund management business has seen better days Mr Lindsell continues to buy. Has anybody modelled where the FM company is and what sort of payout might be forthcoming in 2024.

[fabius1] 04/10/2023 11:28

steve3 - Sorry for the late response. EI has addressed it.

EI - Agreed. Plenty of fundamental kinks in the markets on a number of counts for me. LTI is sitting around long term channel support and 2016 resistance/2018 support. Interesting to see how it fairs.