Nick Train admits his ‘native optimism’ is getting harder to maintain

As Lindsell Train Limited weighs on LTIT


Nick Train (pictured) remains bullish about the prospects for Lindsell Train Investment Trust (LTIT), despite its performance continuing to be hamstrung by its largest holding, Lindsell Train Limited (LTL).

LTIT saw its net asset value (NAV) fall by 7.6% in the first half of its financial year to 30 September, driven largely by a 10% fall in the value of LTL. Michael Lindsell, the trust’s portfolio manager, admitted earlier in the year that LTIT had been “hobbled” by the stake, and the latter’s valuation has continued to slide.

Much of the LTL valuation drop-off is attributable to a £1.9bn fall in funds under management in H1, from £20.5bn to £18.6bn over the six months.

Train said: “I admit that, threading through today’s macro-economic and geopolitical thickets, I must work harder than usual to maintain my native optimism.”

LTL made up nearly 43% of the trust’s NAV on 30 September, and this has since dropped to 41.5% according the its October factsheet. Its second largest holding, the London Stock Exchange Group, accounts for just under 9% of the portfolio’s assets.

LTIT also has a holding in Lindsell Train North American Equity Fund, which made up 8.2% of net assets on 30 September, but LTIT chairman Julian Cazalet conceded that it too has been “burdened with the same sort of relative underperformance” that has affected all LTL strategies.

Across the period, LTIT’s share price fell 10%, from £1,105 to £991, and its net assets are down to £206m from £223m on 31 March. It ended the period trading at a 3.7% discount.

The company also made a loss after tax of £6.3m across the six months, compared to a return of £14.5m in the same period last year.

Cazalet said that the underperformance was “understandable” given the uncertainties surrounding the conflict in Ukraine, rising inflation and rising interest rates.

Despite the recent difficulties, Train was optimistic. He noted the promising prospects for Nintendo, which makes up 7.2% of the trust’s NAV. Its share price has grown 5.6% YTD, and he was hopeful that the company would continue to set new sales records for its games and devices “for years to come”.

He also added that Diageo, the owner of Guinness, and Heineken, was set to continue to dominate its share of the market.

Train may be right that better times are round the corner as, since 30 September, LTIT’s share price is up 8%. In addition, as of 31 October, the trust’s discount has narrowed to 1.4%.

The report added that Roger Lambert and Helena Vinnicombe joined as non-executive directors at the end of September, and Cazalet hoped, among other things, that the pair would bring some “new perspectives” to the board.


Latest Stories