Lindsell Train IT 80% Premium to NAV

TBC15

For those interested the premium is now standing at 16%. There appeared to be some large amounts bought as the premium passed through 20%.

Thrugelmir

TBC15 wrote: »

For those interested the premium is now standing at 16%. There appeared to be some large amounts bought as the premium passed through 20%.

When was the last formal valuation of LT itself ?

TBC15

Thrugelmir wrote: »

When was the last formal valuation of LT itself ?

31st July I think.

Ash_Pole

What's accounted for this drop? The underlying NAV looks healthy. Just a case of LT mania and sanity finally returning?

https://www.hl.co.uk/shares/shares-search-results/l/lindsell-train-investment-trust-ord-75p/share-charts

iglad

Ash_Pole wrote: »

What's accounted for this drop? The underlying NAV looks healthy. Just a case of LT mania and sanity finally returning?

https://www.hl.co.uk/shares/shares-search-results/l/lindsell-train-investment-trust-ord-75p/share-charts

It's lost 33% over the past month but Nick Train did say that the price premium was unsustainable about a month ago.

TBC15

Having just bought in at 16% it would appear its fallout from the Woodford/HL fiasco.

bowlhead99

TBC15 wrote: »

Having just bought in at 16% it would appear its fallout from the Woodford/HL fiasco.

HL removed the LT UK and Global funds from its 'Wealth 50' list of funds that it promotes to its customers as favourite funds. The billions of pounds in those funds (and the potential for future growth and capital inflows) are what provide the revenue stream to LT to justify the value of the LT management company within the LT Trust's books, and the somewhat higher value that the market puts on it.

On the day they announced they were dropping those two LT funds due to a conflict of interest (HL promoted funds which had a heavy concentration of investment into HL, causing more HL shares to be bought each time a customer followed the recommendation to buy an LT fund), the Trust share price lost over 20% the same day.

In recent years HL customers had been over a fifth of the money in the LT UK fund (disclosed as a 'related party' in the annual reports up to 2017, but falling below the threshold for 2018). Aside from pushing customers towards the fund via the Wealth 50 up to last month, their multi-manager funds hold the UK fund as 10% of their 'UK Growth' strategy and the Global fund as almost 7% of their £1.9bn 'Special Situations Trust' (even though LT's global fund is not marketed as a Special Situations fund). They haven't dropped LT from those multi manager funds or reduced the allocation percentages, and are perhaps unlikely to do so until the LT funds start to underperform alternatives.

bowlhead99

Thrugelmir wrote: »

When was the last formal valuation of LT itself ?

TBC15 wrote: »

31st July I think.

They haven't published a monthly manager report / factsheet more recent than 30 June. They are perhaps unlikely to get a formal third party valuation every month, let alone each day that they publish a NAV - as they're not required to do so. It can be a far cry from doing a formulaic sense check valuation (e.g. x times last 12 months profits or y times the £22.6bn of AUM) to a full assessment which would stand scrutiny in the annual audit etc, though they said in the last annual report that 'the formula for valuing its stake in LTL has not changed' (though is under constant review).

However, on Friday they did publish the Trust's 31 July NAV and commented that LT Limited had been valued at a valuation 5.27% higher than its valuation at 30 June.

Lindsell and Train have said they haven't bought shares in the LT trust for many years as they don't want to give the impression by buying on market above NAV that they believe the official director's valuation to be overly cautious. Unlike some other asset management businesses they don't have a deep succession plan, so public market comparable might not be appropriate with lots of 'key man' risk as they get older. As per some media coverage however, in the next breath they are happy to say that if they get the opportunity to buy at NAV again, they would love to do so

Thrugelmir

iglad wrote: »

It's lost 33% over the past month but Nick Train did say that the price premium was unsustainable about a month ago.

Sometimes worth pocketing a profit. Cash is king.

LHW99

Sometimes worth pocketing a profit. Cash is king.

Indeed, this was one of a couple of things in the portfolio I had a stop loss on, which was triggered about a month ago.
I may buy in if it goes back to nearer the level the units were originally bought at in 2012 - on the other hand, I may not.