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Lindsell Train IT

Closed-end funds and OEICs
Mike4
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Re: Lindsell Train IT

#430146

Postby Mike4 » July 24th, 2021, 5:20 pm

Lootman wrote:
Mike4 wrote:Should I decide to buy LTI does one have to buy a discrete quantity of whole shares, or can one buy fractions? I ask because the share price last night appeared to be £1,657.50.

You would need a broker who offers fractional shares if you want to invest an amount less than a single LTI share. Interactive Brokers is one; I am not sure of others:

https://www.investmentguide.co.uk/how-t ... investors/


Thanks!

Continuing with questions so basic I never see them in FAQs, buying fractional shares seems a bad idea from your link.

I see my trading platform (X-O) offers to accept orders placed either as number of shares to purchase, or as a number of GBP to spend on a given share. So from the above, is it generally regarded as a good policy always order discrete quantities of shares rather than a number of GBPs, specifically in order to avoid ending up with a fractional ownership? Are there any downsides to this, other than needing to fund one's account with enough cash to make sure the purchase goes through? (And therefore ending up with some unspent cash.)

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Re: Lindsell Train IT

#430149

Postby Alaric » July 24th, 2021, 5:28 pm

Mike4 wrote:I see my trading platform (X-O) offers to accept orders placed either as number of shares to purchase, or as a number of GBP to spend on a given share.


Something to check with the Broker, but it's common practice to allow orders to specify a purchase price. Outside of OEICs, most Brokers don't treat this as an invite to offer fractional shares but rather as the maximum spend on an integer number of shares.

Mike4
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Re: Lindsell Train IT

#430153

Postby Mike4 » July 24th, 2021, 5:37 pm

Alaric wrote:
Mike4 wrote:I see my trading platform (X-O) offers to accept orders placed either as number of shares to purchase, or as a number of GBP to spend on a given share.


Something to check with the Broker, but it's common practice to allow orders to specify a purchase price. Outside of OEICs, most Brokers don't treat this as an invite to offer fractional shares but rather as the maximum spend on an integer number of shares.


Ok thanks, I'll check with them/see if they have any help files covering the point.

I don't particularly want to buy fractional shares, in fact I'd prefer to avoid them. The question really only cropped up due to considering buying LTI and seeing the massive price of a single share.

Given the four figure price of a share, is a share split on the cards in the future or are LT perfectly happy with this? It must discourage the really small investor but perhaps they don't particularly care about that.

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Re: Lindsell Train IT

#430154

Postby mc2fool » July 24th, 2021, 5:40 pm

Mike4 wrote:I see my trading platform (X-O) offers to accept orders placed either as number of shares to purchase, or as a number of GBP to spend on a given share. So from the above, is it generally regarded as a good policy always order discrete quantities of shares rather than a number of GBPs, specifically in order to avoid ending up with a fractional ownership?

Pretty much all brokers allow you to place buy orders as either a number of shares or a GBP amount, but that doesn't mean that they all give fractional shares.

For most brokers a GBP amount is just the most you want to spend and they'll give you the largest number of whole shares to fit that.

So, e.g., if you say you want to spend £10K on buying LTI and LTI is currently on offer at £1,600 per share, then the broker will first take their commission, say £10, and then look to buy the most whole shares with the remaining £9,990, after taking stamp duty into consideration.

In this example your £10K will get you 6 shares at £1,600 per share = £9,600, with £48 going to HMRC for stamp duty, and £10 to the broker, leaving £342 that will go back into your account.

Lootman
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Re: Lindsell Train IT

#430155

Postby Lootman » July 24th, 2021, 5:43 pm

Mike4 wrote:Given the four figure price of a share, is a share split on the cards in the future or are LT perfectly happy with this? It must discourage the really small investor but perhaps they don't particularly care about that.

There is a prestige factor in a high nominal share price. That is why Berkshire Hathaway A shares cost $420,000 each (although cheaper B shares are available). And shares in Amazon and Google are thousands each.

It avoids having a lot of small investors with tiny holdings on the share register. Brokers who offer fractional shares offload that work, but there is not so much call for that in the UK where the prestige factor barely exists.

LTI is one of my largest fund positions but even so I only have 25 shares. But as of Friday they shows a 865% gain, I can live with that.

mark88man
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Re: Lindsell Train IT

#430178

Postby mark88man » July 24th, 2021, 8:46 pm

For my son's JISA and now ISA I bought 12 LTI shares at £360. We then watched them climb - sold a few at £1200 to pay for driving lessons and new IT, then watched delighted and annoyed as they went to £2000 and joked about selling them, only to watch them plunge to just over £1000 and then wend their way back over time. He doesn't need the money so like earlier posters I am waiting for a revaluation on the "45%" as I do not see the asset owning classes getting any poorer under the current administrations.

It has been educational reading up on them - I don't have anything to add, other than my worry is about succession and what happens if the main man decides to stop.

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Re: Lindsell Train IT

#430211

Postby xiox » July 25th, 2021, 8:33 am

Mike4 wrote:I see my trading platform (X-O) offers to accept orders placed either as number of shares to purchase, or as a number of GBP to spend on a given share. So from the above, is it generally regarded as a good policy always order discrete quantities of shares rather than a number of GBPs, specifically in order to avoid ending up with a fractional ownership? Are there any downsides to this, other than needing to fund one's account with enough cash to make sure the purchase goes through? (And therefore ending up with some unspent cash.)

I use X-O. I order by GBP and they have never given me fractional shares (even for ETFs). It's always the maximum number of whole shares within the value (after charges).

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Re: Lindsell Train IT

#430817

Postby OllyDrod » July 27th, 2021, 10:40 pm

I’ve held LTI for a while and it’s been quite a ride.

Re: succession, there are plans in motion - the Lindsell Train North America Equity Fund was launched in April 2020, largely seeded from LTI and by Lindsell and Train themselves. The fund is being run by James Bullock and Madeline Wright (deputies to Lindsell and Train on several of their mandates) and Train referred to it as a key part of his succession planning in one of his Monthly updates (which are excellent and well-worth reading). Imagine it’s from May or June 2020 if anyone wants to dig it out. The North America Fund isn’t open to the public (yet) and constitutes about 6.6% of the LTI portfolio.

Re: the premium, this was recently discussed on the June 19 episode of Jonathan Davies’ MoneyMakers podcast (about 23mins in). To paraphrase: LTI has deliberately not issued new shares to control the premium, as increasing its stake in Lindsell Train Ltd would be difficult (impossible?) and investing additional funds without doing so would ultimately have a dilutive effect on the relative size of its holding. I hadn’t twigged this before - another quirk to consider for this IT.

As an aside, I wouldn’t buy on the current premium, but always look to top up if it drops below double-digits.

- OllyDrod

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Re: Lindsell Train IT

#430851

Postby Lootman » July 28th, 2021, 7:41 am

OllyDrod wrote:Re: the premium, this was recently discussed on the June 19 episode of Jonathan Davies’ MoneyMakers podcast (about 23mins in). To paraphrase: LTI has deliberately not issued new shares to control the premium, as increasing its stake in Lindsell Train Ltd would be difficult (impossible?) and investing additional funds without doing so would ultimately have a dilutive effect on the relative size of its holding.

I do not think it would necessarily be difficult or impossible for the LTI stake in the management company to rise. But what it would mean is that Messrs. Lindsell and Train would have to be willing to have their share diluted. What effectively would be happening is that Mr L and Mr T would be gradually selling their shares in their company to LTI.

Now of course they might want to gradually sell, in which case there would be no problem. But the fact that this doesn't happen is presumably a sign that they want to retain their current percentage holding. And that shows that they have confidence in the enterprise into the future.

So paradoxically if LTI does start buying back its shares, and increasing its stake in the parent company, that could be a negative indicator for the outlook for both the trust and its parent. As things stand, neither the owners nor the shareholders want to sell, so daily trading volumes are low and the premium remains high.

One way to look at the situation is that this is partly a private equity position. And as always with PE, the real question is about the eventual exit, when that happens and at what price?

Dod101
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Re: Lindsell Train IT

#430861

Postby Dod101 » July 28th, 2021, 8:21 am

To me the interesting question is why it would matter if the LTI stake in the management company were to be diluted (in terms that is of the LTI portfolio). It is in any case for the Directors' of LTI to decide whether or not to issue more shares to help control the premium. Normally the Directors will be happy to do that (sometimes falling over themselves to do so) because as costs are at least partially fixed it brings down the Ongoing Charges ratio, will increase liquidity and the very act of issuing the shares at a modest premium to NAV helps the ongoing shareholders, so my question would be is it in the best interests of the shareholders not to issue more shares?

I do not hold LTI as I think that exposure to one Nick Train managed entity is quite enough. They pretty well duplicate each other in terms of holdings. LTI is a bit different. It is a sort of 'master' holding with stakes in Finsbury Growth and Income and Lindsell Train Ltd as well as the usual direct holdings.

Dod

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Re: Lindsell Train IT

#430897

Postby Lootman » July 28th, 2021, 9:55 am

Dod101 wrote:To me the interesting question is why it would matter if the LTI stake in the management company were to be diluted (in terms that is of the LTI portfolio). It is in any case for the Directors' of LTI to decide whether or not to issue more shares to help control the premium. Normally the Directors will be happy to do that (sometimes falling over themselves to do so) because as costs are at least partially fixed it brings down the Ongoing Charges ratio, will increase liquidity and the very act of issuing the shares at a modest premium to NAV helps the ongoing shareholders, so my question would be is it in the best interests of the shareholders not to issue more shares?

It is a fair question but as a LTI shareholder myself I do not want that. The reason being that it is that 25% stake in the parent company that makes LTI really interesting over one of the parent company's other funds. If the issuance of new shares means that 25% stake declines to 20% or 15% then it becomes less interesting.

Whilst if new shares were issued and the LTI stake in the parent company is not diluted, then that means that Mr T and Mr L are getting diluted, and why would they want that unless they lack confidence in future performance?

So either way I am happy for no new shares to be issued, thereby also preserving the premium that might be handy if I decide to sell.

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Re: Lindsell Train IT

#430901

Postby scrumpyjack » July 28th, 2021, 10:29 am

I have not looked at this situation in detail but presumably the so-called 'premium' simply represents the market having a different view of what the management company is worth compared to the book value of LTI's holding in the management co? It isn't really a premium in the sense that other IT's sell at a premium/discount to their underlying investments because presumably there isn't an open market in the management company's shares. The 'net asset value' of the management company is irrelevant as good fund managers would be valued on a multiple of their EPS (a high one!) not their NAV.

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Re: Lindsell Train IT

#430904

Postby Dod101 » July 28th, 2021, 10:33 am

This for me is simply an academic argument but I do not think anyone is suggesting that the stake Lindsell Train IT holds in LT Ltd should be diluted; only that as a percentage of the LTI portfolio it would drop from currently around 46% of its total p[ortfolio to something less in the event that LTI issued more shares. Were I a shareholder I would not mind that as it would reduce the dependence on LT Ltd. Interesting situation though.

The Chairman actually deals with this point, to answer scrumpyjack. They revalued LT Ltd downwards at 30 March 2020 because they base their valuation on funds under management. I have not looked at the total make up of the premium.

Dod

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Re: Lindsell Train IT

#460241

Postby fisher » November 23rd, 2021, 9:14 am

A big share price drop yesterday (circa 8%) means that Lindsell Train IT (LTI) is now down to a premium to NAV of less than 5%.

I'm not sure what the reason was for the big share price drop, but perhaps it is a little more worthy of consideration now at this premium level.

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Re: Lindsell Train IT

#460248

Postby monabri » November 23rd, 2021, 9:39 am

Article in The Telegraph over the weekend says folk have been pulling money out of the LT funds ....comments about pedestrian performance .

https://www.telegraph.co.uk/investing/f ... one-rails/

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Re: Lindsell Train IT

#460288

Postby Dod101 » November 23rd, 2021, 11:49 am

monabri wrote:Article in The Telegraph over the weekend says folk have been pulling money out of the LT funds ....comments about pedestrian performance .

https://www.telegraph.co.uk/investing/f ... one-rails/



Yes investors have very short horizons. LT as an investment house has not done so well this last twelve months or so and of course their problem is that they have a relatively small number of shares that they invest in so any shortcomings will affect all of their funds to some extent.

Dod


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