Lindsell Train Investment Trust (LTIT) manager Nick Train (pictured) pointed to recent purchases by Bill Gates and Warren Buffett of the trust’s underlying holdings as evidence its portfolio will “endure and prosper in the decades to come.”
A quartet of LTIT’s largest positions – Diageo (7.1%), Heineken (3%), London Stock Exchange (8.4%) and Nintendo (6.1%) – amount to roughly a quarter of the trust’s net asset value (NAV). All four have seen significant new investment in the last few months.
Berkshire Hathaway, Warren Buffett’s investment vehicle, recently acquired 18.5m shares in Diageo, making it the 10th largest shareholder.
In February, the Gates Foundation purchased 4.3% of Heineken Holdings, worth roughly $1bn (£820m), the fourth largest stake in the drinks company.
Meanwhile, Microsoft and the Saudi Public Investment fund gained shares in LTIT holdings LSE and Nintendo respectively.
Commenting on the share purchases in the trust’s monthly report, Train said: “No one, including us, expects any corporate activity or takeovers because of these investments. Nonetheless, we regard the stake taking as significant. Serious long-term institutions or companies, with serious amounts of capital to deploy have chosen to build serious positions in these serious companies. We assume they have done so for the same reasons as we have made them such an important part of your portfolio.
“The world is an uncertain place. Technology is creating great new wealth, but it is also destroying old wealth, including ‘old’ technology wealth. In such circumstances holding a meaningful proportion of your wealth in brands and business franchises that are highly likely to endure whatever gets thrown at them is attractive.”
“It seems to us and evidently to these new investors, that Diageo’s brands, the Heineken brand, LSE’s market and data assets and Nintendo’s beloved gaming franchises are highly likely to both endure and prosper in decades to come. That makes them both rare and valuable,” he added.
The trust’s NAV fell 1% in February, on par with the MSCI World Index benchmark, while its share price discount narrowed to 1.66% from 4.1% in January.
Across the month, RELX, Heineken and AG Barr were the top three positive contributors performance, with Nintendo, Lindsell Train Limited and Paypal the largest detractors.
See also: Nick Train laments ‘particularly galling’ Diageo drag on FGT