Lindsell Train Investment Share Discussion Threads

[flyer61] 13/1/2024 10:32

Thanks S3S....glad i'm not totally in an echo chamber. Not even Spec pitching up to give me a ribbing!

Discount is presently as high as it has ever been. The cash at LTL makes me think by hook or by crook the divi will be maintained. At the end of the day Mr Train won't want this doom loop to keep on going, if for nothing else to prove spec wrong!

[steve3sandal1] 12/1/2024 18:33

I've gone round and round in the past. It depends if you are modelling on AUM it's slightly fully valued. On actual real profitability it's cheap, but getting more expensive, but still cheap. If you account for the cash on balance sheet which belongs to shareholders it's cheap, but we as minorities will never see it and they need it to meet bomb proof regulations. Given financial performance of their funds and AUM trend I think it's probably fair. There may be a premium upon change of control but that's probably the last thing we want. I'm expecting Lindsell and Train to sell the business to a trade buyer around their retirement.

[flyer61] 12/1/2024 18:11

Been modelling the LTL value versus other comparable FM's. Anybody done similar? It appears that it is valued slightly higher than others. Is this fair given its historic pedigree or is it unjustified in the new world we live in??

[flyer61] 11/1/2024 10:36

Still buying......will to live going though...

[giltedge1] 04/1/2024 10:17

NAV back over £1000, my guess FUM up in Dec 23 hopefully, with great 2023 gains in Relx,Lseg,Sage,Experian & Nintendo. Would like to add but already have 12% of my Sipp.

[flyer61] 03/1/2024 16:39

Finally a few other bargain hunters have appeared.

[spectoacc] 29/12/2023 19:15

Lol @Flyer61. My view on Mr Train has been unchanged for years - one-trick pony ;)

You've reminded me that I once owned 0.02% of Leeds United. Before they went bust.

[flyer61] 29/12/2023 16:23

Thanks s3s,

I may have to be patient!

need the AUM at LTL to stabilise ie the outflows to stop. The markets are doing their bit by going up.

The equity portfolio is very liquid therefore I can value it at NAV when modelling LTL's value versus the share price

Discount seems excessive and possibly down to the markets total disinterest in it. Risk it ends up with a bigger discount ala Caledonia CLDN

We have a new Chairman, Roger Lambert.

Maybe I need to write to him with a multi point plan of how he can

Narrow the discount, increase the shareholder base, improve the investment performance. (Just for you Spec I'll suggest he sacks Nick Train ;-) )

Happy new year to all!

[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 ;)