In his latest factsheet update, Train reported that his FGT was at “an all-time high”, with net asset value up 14% year-to-date.
During July alone, the trust’s NAV per share was up 2.7% on a total return basis compared with the FTSE All-Share’s 1.2% gain.
The trust’s recovery in 2017 was “a relief” to Train and something he attributes entirely to Unilever’s rejection of Kraft Heinz’s $143bn (£112bn) bid.
Following, Kraft’s failed bid to snatch Unilever in February, its share price has skyrocketed, ratcheting up by close to 30% year-to-date.
As the largest single investment of Train’s FGT, making up 10.2% of the portfolio, Unilever’s gains have catapulted the vehicle to an all-time high, helping it bounce back from a difficult 2016.
During the first six months to 31 March 2017, the FGT failed to beat the FTSE All-Share’s total returns, which Train blamed on his troublesome longstanding holding, Pearson.
“When I look back at 2017 year-to-date, there is no question in my mind that the single most significant event explaining our performance this year was Kraft’s attempted merger with Unilever,” he told shareholders.
In addition to benefiting his own share price by proxy, the failed takeover of the Anglo-Dutch consumer goods firm has convinced Train that a number of his tried and true consumer goods and luxury retail holdings “look particularly undervalued currently”.
Like Unilever, Diageo, Heineken and Burberry Group, his second, fifth and sixth top holdings, respectively, are “businesses with great brands” and “important emerging markets positions”, he stressed.
But the holding Train said he has added to the most this year is the world’s biggest chocolate and biscuit business, Mondelez, which is now his tenth largest holding at 5.4%.
The owner of Cadbury has a “superb market position in China and India”, he argued, and after Kraft’s approach to Unilever “looks very, very appealing”.
One of the biggest takeaways from Kraft Heinz and Unilever is that “it emphasises the extent to which we are in a global M&A boom”, said Train.
“2015 was the biggest single year for global M&A in financial history; 2016 was the second biggest; and so far, 2017 is running ahead of both of those previous years.
“That is a very supportive backdrop for equity investing, not just in the UK but globally.
“I would expect to see a lot more and a lot bigger transactions as this year unfolds,” he added.
