Nick Train: The stock I’d love to own but probably never will

UK brand has an ownership structure impossible for the Lindsell Train manager to buy into

Nick Train has named luxury UK leather goods business Mulberry as the one company he would love to add to his stable of “beloved brands” but has virtually no chance of ever owning.

Train told Portfolio Adviser shares in the luxury handbag designer look considerably cheaper now than they did seven to eight years ago because the company has confronted “a litany of problems”. This year alone the fashion house has seen 72% shaved off its share price.

“We’re very, very interested in luxury brands but there are very few of them available on the UK stock market,” he said.

“Of course we’re interested in Mulberry,” he said. “It doesn’t have maybe the same heritage as Burberry, in fact it definitely doesn’t, but nonetheless it’s a renowned globally recognised brand.” Train is the largest institutional shareholder in Burberry owning 5.3% of the business.

Ong family zaps chance of ever owning Mulberry

The chances of him owning the leather goods designer are “virtually zero” due to the fact that 75% of the shares are owned by just two investors, Train said.

Billionaire Singaporean power couple Christina Ong and her husband Ong Beng Seng currently hold 56.19% of the company via their holding company Challice Limited. Their daughter also sits on the board.

Behind the Ong family, Train said there is a “bizarre holding” tied up in Banque Hallivand worth 24.03% of the company. “I’m not even sure if anyone knows who the beneficial owner of that is.”

The current shareholder structure means “it’s almost impossible for anybody to build a holding,” said Train.

Burberry a top performer for Train

Burberry was one of the top performers for Train’s Finsbury Growth & Income trust in the first half of the year. However, its share price has seen more volatility since the summer leaving its shares down 3.8% year-to-date.

The Finsbury Growth & Income trust has returned -1.83% over the same time frame.

Train’s Lindsell Train UK Equity fund, which also holds Burberry, remains in the top quartile during what has been a tough time for UK markets but has similarly produced weaker returns than in previous years.

It has returned just 1.5% over one year versus the IA UK All Companies’ -6.8%, according to Trustnet. On a six month view the fund is down 6.4% compared with the sector’s 13.3%.

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