Lindsell Train

Ash_Pole

I've been reading a bit about Lindsell Train. Clearly a very successful fund, I'm thinking about a long-term investment.

They have a LT investment trust which is up over 300% over 5 years, but the NAV is only up 170% and the current premium is 69%. Is there any rationale for investing in this rather than in their OEIC which doesn't come at a premium, other than gambling that this premium would increase even further?

Thrugelmir

Is the premium justified? That's the question you need to consider. All of which depends on the future performance of Lindsell Train as a boutique investment house. Fund managers eventually retire / lose their star status. Funds under management decline. Then revenues and profits likewise decline. Sucess such as LT have had is rare.

Alexland

If there is a style rotation then LT fund investors could suffer a period of painful underperformance and LT trust investors could suffer significant losses. Even the manager doesn't recommend people buy the trust at current pricing.

Alex

masonic

The fund is employing 100% gearing and its main constituent (46% of the fund) is the unlisted Lindsell Train Limited company. You'd need to be very brave to invest.

TBC15

Nick thinks a 69% premium is ridiculous, who are we to argue?

bostonerimus

If you have to ask someone else about the sense of an actively managed investment then I don't think you should be making that investment.

dividendhero

masonic wrote: »

The fund is employing 100% gearing and its main constituent (46% of the fund) is the unlisted Lindsell Train Limited company. You'd need to be very brave to invest.

A couple of points

(1) The "100%" gearing isn't quite what it seems. It's calculated by dividing gross assets by net assets then multiplying by a 100. CTY is 112% geared by the same measure

(2) The large premium could well be because of the unlisted LT company, it may be held on the books at an old valuation

Aminatidi

The IT is a totally different beast to the Lindsell Train OEIC's.

Nick Train has quite a bit invested in Finsbury Growth Trust which he manages.

masonic

dividendhero wrote: »

A couple of points

(1) The "100%" gearing isn't quite what it seems. It's calculated by dividing gross assets by net assets then multiplying by a 100. CTY is 112% geared by the same measure

Ah yes, so it isn't geared at all.

(2) The large premium could well be because of the unlisted LT company, it may be held on the books at an old valuation

I didn't make any comment about it having a large premium. I just noted that it is half invested in a single unquoted company.

Alexland

masonic wrote: »

Ah yes, so it isn't geared at all.

There's an interview with Nick Train where he declared himself 'allergic to debt' so it follows that he wouldn't use gearing. If the OP really wants to buy into this style as a trust then Finsbury Growth & Income might be a better choice.

Alex

masonic

Alexland wrote: »

There's an interview with Nick Train where he declared himself 'allergic to debt' so it follows that he wouldn't use gearing. If the OP really wants to buy into this style as a trust then Finsbury Growth & Income might be a better choice.

Yes, there's a notable absence of debt even in the accounts of the underlying Limited company.