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Lindsell Train IT
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Lindsell Train IT
Having filled up last year's ISA with a far more conservative fund than I thought I was buying, I'm inclined to go for some higher risk for this year. Lindsell Train IT (LTI) have caught my attention for some spectacular gains (and losses!) recently, far more volatile than one normally expects from an IT I think.
But my main reason for posting is to ask about their holdings, the largest of which is Lindsell Train Ltd in which 45% of the trust's assets are invested. Initially this seems horribly risky given the two companies probably share some managers and philosophies, amplify risk rather like gearing but via a totally different mechanism. Might this be an underlying reason for the volatility of LTI? What does the board think?
I've searched but not found much discussion of LTI, other than comments in passing. Maybe I haven't searched enough...
But my main reason for posting is to ask about their holdings, the largest of which is Lindsell Train Ltd in which 45% of the trust's assets are invested. Initially this seems horribly risky given the two companies probably share some managers and philosophies, amplify risk rather like gearing but via a totally different mechanism. Might this be an underlying reason for the volatility of LTI? What does the board think?
I've searched but not found much discussion of LTI, other than comments in passing. Maybe I haven't searched enough...
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Re: Lindsell Train IT
Mike4 wrote:But my main reason for posting is to ask about their holdings, the largest of which is Lindsell Train Ltd in which 45% of the trust's assets are invested.
What you get is a hybrid consisting of 45% of a fund manager (like Schroders or abrdn) and 55% of an IT managed by the fund manager.
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Re: Lindsell Train IT
Mike4 wrote:Having filled up last year's ISA with a far more conservative fund than I thought I was buying, I'm inclined to go for some higher risk for this year. Lindsell Train IT (LTI) have caught my attention for some spectacular gains (and losses!) recently, far more volatile than one normally expects from an IT I think.
But my main reason for posting is to ask about their holdings, the largest of which is Lindsell Train Ltd in which 45% of the trust's assets are invested. Initially this seems horribly risky given the two companies probably share some managers and philosophies, amplify risk rather like gearing but via a totally different mechanism. Might this be an underlying reason for the volatility of LTI? What does the board think?
I've searched but not found much discussion of LTI, other than comments in passing. Maybe I haven't searched enough...
I do not know the current situation but it used to sit on a sky high premium to NAV and that could be a reason for the volatility in the share price. I see that at the end of May it was at a premium of around 16% but I do not know the current position. Apart from its interest in Lindsell Train Ltd its other holdings seem to be solid conservative holdings, the shares that Nick Train usually invests in. LT Ltd is of course the investment manager and I assume that most of the balance will be held by Messrs Lindsell and Train. It should be a decent enough investment. Personally I hold Finsbury Growth and Income, managed by Nick Train and a good long term holding. I would not call anything managed by LIndsell Train high risk.
Dod
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Re: Lindsell Train IT
As Dod said - it used to be on an absurdly high premium - effectively a guess that the value of the fund manager operation was much higher than reported. At one stage, some years ago, the fund managers (Lindsell & Train) were discouraging purchases at such a high premium. The premium is still highly volatile, having varied between 0% and (almost) 30% over the past year.
If you want a global fund managed by Lindsell & Train which does not contain the fund manager operation, then they also run Lindsell Train Global Equity (a Dublin OEIC).
Their other IT is Finsbury Growth and Income - but it is predominantly a UK IT, and its OEIC mirror is Lindsell Train UK Equity. Not surprisingly, the UK funds have performed well below the global funds over the past 5 years.
If you want a global fund managed by Lindsell & Train which does not contain the fund manager operation, then they also run Lindsell Train Global Equity (a Dublin OEIC).
Their other IT is Finsbury Growth and Income - but it is predominantly a UK IT, and its OEIC mirror is Lindsell Train UK Equity. Not surprisingly, the UK funds have performed well below the global funds over the past 5 years.
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Re: Lindsell Train IT
I have bought shares in Lindsell Train IT (LTI) over the last year. Around 45% of the fund is shares of the management company Lindsell Train Limited which is not a listed company. Because it is not listed, the value of its shares are much more open to debate. I can see that it may be conservatively valued when they do their valuation of this company (which I think is twice a year but I may be wrong). I think it is this potential conservative valuation that causes them to be at a high Premium to NAV with higher than usual volatility.
You have the value of the listed holdings in the trust which can be valued daily and account for 55% of the trust and the rest is LT Limited. Partly because of the successful past performance of the trust, but perhaps even more the potentially conservative valuation of LT Limited, the trust stands at a premium to its NAV. Currently, according to morningstar, it is at a 27% premium to its NAV (see link below). So you have to ask yourself if this premium is warranted. Personally I think it's a bit high. I was buying when it was at a small single digit premium and I think I may have bought some at low double digits - around 12 to 15%. I think that premium may be warranted based on the value of its LT Limited holding, but at 27% I get nervous.
If you look back at June 2019 it was standing at nearly a 100% premium to NAV but that dropped drastically by the beginning of January getting nearer to 20%. The morningstar link below is very good for comparing NAV to share price.
If I were looking to buy into a Lindsell Train managed IT at the moment I would probably go for Finsbury Growth & Income (FGT) which is also managed by Lindsell Train and which shares many holdings with LTI but has no holding in the management company. They are currently at a 3% discount according to morningstar and they are more usually at a small premium. Have a look at the links below where you can compare both. The Hargreaves Lansdown site shows the top 10 holdings and also has links that allow you to download their annual and half yearly reports so you can compare their portfolios in detail if you wish. Of course, LTI may go to an even higher premium in which case that might well be that trust to buy right now - it's a bit more of a gamble than FGT IMHO.
Lindsell Train IT links:
[url]https://tools.morningstar.co.uk/uk/cefreport/default.aspx?SecurityToken=E0GBR01Q73]2]0]FCGBR$$ALL[/url]
https://www.hl.co.uk/shares/shares-search-results/l/lindsell-train-investment-trust-ord-75p
Finsbury Growth & Income links:
[url]https://tools.morningstar.co.uk/uk/cefreport/default.aspx?SecurityToken=F0GBR053PE]2]0]FCGBR$$ALL[/url]
https://www.hl.co.uk/shares/shares-search-results/f/finsbury-growth-and-inc-trust-ord-25p-share
I can't get the morningstar URLs to format correctly so I'm afraid you will have to copy and paste them into your browser manually.
You have the value of the listed holdings in the trust which can be valued daily and account for 55% of the trust and the rest is LT Limited. Partly because of the successful past performance of the trust, but perhaps even more the potentially conservative valuation of LT Limited, the trust stands at a premium to its NAV. Currently, according to morningstar, it is at a 27% premium to its NAV (see link below). So you have to ask yourself if this premium is warranted. Personally I think it's a bit high. I was buying when it was at a small single digit premium and I think I may have bought some at low double digits - around 12 to 15%. I think that premium may be warranted based on the value of its LT Limited holding, but at 27% I get nervous.
If you look back at June 2019 it was standing at nearly a 100% premium to NAV but that dropped drastically by the beginning of January getting nearer to 20%. The morningstar link below is very good for comparing NAV to share price.
If I were looking to buy into a Lindsell Train managed IT at the moment I would probably go for Finsbury Growth & Income (FGT) which is also managed by Lindsell Train and which shares many holdings with LTI but has no holding in the management company. They are currently at a 3% discount according to morningstar and they are more usually at a small premium. Have a look at the links below where you can compare both. The Hargreaves Lansdown site shows the top 10 holdings and also has links that allow you to download their annual and half yearly reports so you can compare their portfolios in detail if you wish. Of course, LTI may go to an even higher premium in which case that might well be that trust to buy right now - it's a bit more of a gamble than FGT IMHO.
Lindsell Train IT links:
[url]https://tools.morningstar.co.uk/uk/cefreport/default.aspx?SecurityToken=E0GBR01Q73]2]0]FCGBR$$ALL[/url]
https://www.hl.co.uk/shares/shares-search-results/l/lindsell-train-investment-trust-ord-75p
Finsbury Growth & Income links:
[url]https://tools.morningstar.co.uk/uk/cefreport/default.aspx?SecurityToken=F0GBR053PE]2]0]FCGBR$$ALL[/url]
https://www.hl.co.uk/shares/shares-search-results/f/finsbury-growth-and-inc-trust-ord-25p-share
I can't get the morningstar URLs to format correctly so I'm afraid you will have to copy and paste them into your browser manually.
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Re: Lindsell Train IT
And when I mentioned Finsbury Growth and Income I meant to add that it has a modest shareholding in the Lindsell Train Investment Trust.
Dod
Dod
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Re: Lindsell Train IT
Dod101 wrote:And when I mentioned Finsbury Growth and Income I meant to add that it has a modest shareholding in the Lindsell Train Investment Trust.
Dod
In the Annual report of 30th Sept 2020 it is quoted as being 0.6% of the investments.
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Re: Lindsell Train IT
fisher wrote:I have bought shares in Lindsell Train IT (LTI) over the last year. Around 45% of the fund is shares of the management company Lindsell Train Limited which is not a listed company. Because it is not listed, the value of its shares are much more open to debate. I can see that it may be conservatively valued when they do their valuation of this company (which I think is twice a year but I may be wrong). I think it is this potential conservative valuation that causes them to be at a high Premium to NAV with higher than usual volatility.
And that is what makes LTI so interesting.
If you think about very successful UK fund managers of the last decade or so, there are not many and by definition cannot be many. You might suggest Terry Smith or Baillie Gifford. But the thing is you cannot invest in either of them. But another would be LT and Nick Train, and you can invest in him, via LTI.
The fund managers that you can invest in tend to be fairly stodgy and pedestrian. It is hard to get a slice of the fastest growing fund managers because they do not seek dilution.
Now of course LT could do badly and LTI will leverage that decline. But a ride along the way is an interesting punt. My LTI position from about a dozen years ago is up 833%, as of today.
But the real goal is a sale to Blackrock or some such. That is what the valuation of a couple of years ago was predicated upon, in my view.
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Re: Lindsell Train IT
scotia wrote:Dod101 wrote:And when I mentioned Finsbury Growth and Income I meant to add that it has a modest shareholding in the Lindsell Train Investment Trust.
Dod
In the Annual report of 30th Sept 2020 it is quoted as being 0.6% of the investments.
Thanks. In fact in the Annual Report of Finsbury there is a rather more interesting comment. On the establishment of Lindsell Train IT in January 2001 Finsbury took a £1 million investment in Lindsell Train I T. As at 30 September 2020 that stake was worth £11.3 million, they say 'due in no small part to its valuable stake in Lindsell Train Ltd.'
Dod
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Re: Lindsell Train IT
ReallyVeryFoolish wrote:Lootman wrote:fisher wrote:I have bought shares in Lindsell Train IT (LTI) over the last year. Around 45% of the fund is shares of the management company Lindsell Train Limited which is not a listed company. Because it is not listed, the value of its shares are much more open to debate. I can see that it may be conservatively valued when they do their valuation of this company (which I think is twice a year but I may be wrong). I think it is this potential conservative valuation that causes them to be at a high Premium to NAV with higher than usual volatility.
And that is what makes LTI so interesting.
If you think about very successful UK fund managers of the last decade or so, there are not many and by definition cannot be many. You might suggest Terry Smith or Baillie Gifford. But the thing is you cannot invest in either of them. But another would be LT and Nick Train, and you can invest in him, via LTI.
The fund managers that you can invest in tend to be fairly stodgy and pedestrian. It is hard to get a slice of the fastest growing fund managers because they do not seek dilution.
Now of course LT could do badly and LTI will leverage that decline. But a ride along the way is an interesting punt. My LTI position from about a dozen years ago is up 833%, as of today.
But the real goal is a sale to Blackrock or some such. That is what the valuation of a couple of years ago was predicated upon, in my view.
Hmmm. I wouldn't your breath. Why would someone like Blackrock buy a business that is fundamentally just two pensioners who haven't retired yet?
Back in the day I worked for one of the fastest growing fund managers on the planet in the 1990s. The two owners devoted a good deal of their time to looking for buyers. It is the ultimate goal of any ambitious fund manager, except for a few that just prefer to stay as partnerships.
The going price for a high quality fund manager is between 2% to 3% of the assets under management. The attraction is the AUM, the brand name and the talents of the principals, who might in their dotage prefer a more advisory role.
But with a 833% return even without a sale, I feel I can afford to wait.
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Re: Lindsell Train IT
From the Chairman - in the LTI Annual Report to 31st March 2021:-
The share price premium to the NAV ended the year at 20%, up from 11% on 31 March 2020. During the year the premium has averaged just under 10%, a lower level when compared to previous years. Nonetheless we continue to advise new investors to exercise restraint, or at least consider carefully, before buying the Company’s shares at a premium to the NAV. Falling markets, similar to that experienced in early 2020, or poor relative performance from our concentrated portfolio (there are only 14 holdings, with the top five accounting for c.80% of NAV) could quickly undermine the Company’s share price. Buying shares at a premium to the NAV today would only magnify the loss in such a situation
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Re: Lindsell Train IT
Mike88 wrote:When the premium went Sky high I bought the UT equivalent.
There is no UT equivalent. The Lindsell Train Global Equity Fund doesn't have the 45% incestuous holding.
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Re: Lindsell Train IT
mc2fool wrote:Mike88 wrote:When the premium went Sky high I bought the UT equivalent.
There is no UT equivalent. The Lindsell Train Global Equity Fund doesn't have the 45% incestuous holding.
Well thank you for all your comments, everyone.
I wasn't particularly trying to avoid the 45% incestuous (that's the word I was groping for in my OP) holding, rather I was trying to understand it and now, I think I do. A bit anyway.
One further naïve, newbie, wet-behind-the-ears type question if I may. 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.
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Re: Lindsell Train IT
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/
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Re: Lindsell Train IT
Like Fisher I started picking up LTI last Spring with a single digit premium. I had always wanted to own but the premium put me off.
The last 15 months has treated me well and I have been top slicing LTI to limit my exposure and putting those funds in FGT.
The last 15 months has treated me well and I have been top slicing LTI to limit my exposure and putting those funds in FGT.
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Re: Lindsell Train IT
Mike4 wrote:
I wasn't particularly trying to avoid the 45% incestuous (that's the word I was groping for in my OP) holding, rather I was trying to understand it and now, I think I do. A bit anyway.
An unfortunate choice of words. I do not much like the term incestuous to describe the Lindsell Train IT's holding in its manager Lindsell Train Ltd. There is nothing wrong with it and in fact in the Lindsell Train IT Annual Report, as I mentioned earlier, the Chairman commented on the Lindsell Train IT's 'valuable' holding in the manager, Lindsell Train Ltd. The word 'incestuous' tends to have an unsavoury and pejorative connotation which I think is entirely unwarranted. Mike4, presumably without thinking, added to that with the use of the word 'groping'. Just my mind I suppose but language can be very powerful.
Dod
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Re: Lindsell Train IT
I’ve made a few investing mistakes in my time. Here were 3. I top sliced LTI, I top sliced LTI, and I top sliced LTI.
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Re: Lindsell Train IT
Mainwaring wrote:I’ve made a few investing mistakes in my time. Here were 3. I top sliced LTI, I top sliced LTI, and I top sliced LTI.
Indeed, but 10% of my pf in Lindsell Train Ltd alone is quite enough I think.
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Re: Lindsell Train IT
Mainwaring wrote:I’ve made a few investing mistakes in my time. Here were 3. I top sliced LTI, I top sliced LTI, and I top sliced LTI.
In that sense I did the same with Scottish Mortgage but I do not regard them as investing mistakes. With Scottish Mortgage I did what I thought was best at the time and invested the money elsewhere. Scottish Mortgage is still my biggest holding. I have no regrets about the sales.
Dod
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