An upbeat April gave way to a morose May for the Finsbury Growth and Income Trust team, which saw its NAV and share price drop by 3.7% and 4.3%, respectively, while the index rose 0.7%.
Nick Train’s (pictured) frustration is apparent in the factsheet for May 2022, in which he makes off-colour remark about kicking a cat that is unlikely to go down well with animal lovers or the RSPCA.
The three biggest positions in the £1.9bn trust – Diageo, London Stock Exchange Group and Relx – were each down between 6% and 8%, “for no discernible reason so far as we can judge”, Train wrote.
“Of course, I acknowledge the backdrop for all equity markets is unpropitious today. But I might hope that predictable, cash-generative businesses like this trio would’ve been havens in uncertain times.”
Hope the looks cheap in five years’ time
Having delivered 1.2% NAV growth in April against the FTSE All-Share’s paltry 0.3% – Train’s frustration about FGT’s May performance is understandable.
The biggest faller, in percentage terms, last month was Fever-Tree (circa 15%), with Sage also experiencing a double-digit drop. Another drag on the trust’s performance was Experian, which dipped nearly 5% after publishing its full year results. This was despite a 10% dividend increase.
“We have been adding steadily to the Experian holding through 2021/22 and it is now a meaningful portfolio position. Let’s hope our buying has been conducted at prices that will look like bargains in five years’ time,” Train said.
He added: “Before I go and kick the cat – someone has to pay for these frustrations – I will cheer myself by noting a couple of holdings in the portfolio that had a better month.”
Despite highlighting difficult trading conditions in China, Burberry was up 7% on its final results. An 11% dividend and new share buyback – after a smaller one had only recently completed – were well received by investors.
In addition, activist investor Nelson Peltz secured a non-exec director seat on the Unilever board. Train noted that a 1.5% stake is not usually big enough to get a seat at the table.
“The shares rallied, perhaps as UK investors recall how his presence on Cadbury’s share register led to a break-up and eventual sale of that company.”
In the year to May 2022, FGT’s share price dropped 9.8% and its NAV was down 4%. In sharp contrast, the FTSE All-Share was up 8.3%.
