Michael Lindsell has topped up his holdings in the Lindsell Train Investment Trust as the closed-ended fund enjoys a rare discount during coronavirus volatility after the eye-watering 99.5% peak it reached last year.
Lindsell (pictured) purchased £43,000 worth of shares on Monday, a regulatory filing published late that afternoon revealed.
The £195m investment trust had an 11.8% discount yesterday – a vast change from the 99.5% premium it reached on 9 May 2019, according to Association of Investment Companies data. Lindsell Train had repeatedly warned investors it felt the valuation was too high.
It had closed 2019 with a premium of 12.2%.
This month, Lindsell also revealed he had purchased units in the £7.3bn Lindsell Train Global Equity fund on 9 March. “We have no notion of how pernicious the coronavirus effect will be but we do know it will last only a relatively short time in the context of the time horizon we work with when making investments,” he said in the fund’s monthly update to the end of February.
Rare LTIT discount offers ‘additional layer of opportunity’
Tilney managing director Jason Hollands described the investment trust’s rare discount as “an additional layer of opportunity from all the price dislocation going on”.
“When markets have sold off so aggressively, even the highest quality companies have been caught in the crossfire and – rightly – this presents buying opportunities for those with a long-term view,” Hollands said.
Although he added that only Lindsell knew the reasons for his latest stock purchase. “For a man of his means, this a relatively modest sum, but it is positive sign nevertheless. It could be family contributions into Isas, for example, or reinvestment of dividends received elsewhere.”
Willis Owen head of personal investing Adrian Lowcock described the purchase as “reassuring”.
“It shows that fund managers can still look through the noise of today’s events and see a future where companies will continue to exist and continue to operate and most importantly be worth more in the future than they are today,” Lowcock said.
Lindsell Train boutique dominates portfolio
Lindsell Train Limited, the fund boutique founded by Lindsell and Nick Train, accounts for 49.7% of the investment trust’s holdings.
In June 2019, Lindsell raised concerns the then 88.6% premium on the investment trust valued the fund boutique at £1.1bn. He pointed out the succession risk in the business and urged shareholders to weigh up this valuation compared to rival asset managers.
Lowcock said it was helpful the unquoted equities boutique doesn’t have to answer to shareholders about short-term performance of the company during the current market volatility.
Asset managers have been hit hard by coronavirus thanks to their status as market proxies. But Investec spin-out Ninety One rose in early trading on Monday in its admission to the London Stock Exchange.
